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Selling short

Selling short Definition

A technique employed by an investor who believes the market price of a security will drop. The investor borrows stock, which he then sells (even though he doesn't own it). If the price of the stock drops, the investor can buy the same stock for less than what he originally sold it for, and make a profit, after paying the brokerage commission for borrowing the stock. The investor must return a like number of shares of the borrowed stock to the stock lender.

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