GOING SHORT Meaning and
Definition
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Going short refers to a trading strategy where an individual or investor sells assets, such as stocks, commodities, or currencies, that they do not currently own, with the expectation that the price of these assets will decrease in the future. Going short essentially involves betting on the decline of an asset's value.
In this strategy, the investor borrows the assets from a broker or another party, sells them in the market, and buys them back at a later time to return to the lender. The profit is derived from the difference between the selling and buying prices, minus any borrowing fees or interest payments.
Going short is typically employed when an investor believes that an asset is overvalued or expects its price to decline, making it a way to profit from falling markets. It is commonly used by traders to hedge their risk or to speculate on market downturns, economic downturns, or individual stock declines.
It is important to note that short selling has certain risks and can result in substantial losses. If the price of the asset increases instead of decreasing, the short seller may be required to repurchase the asset at a higher price, resulting in a loss. Additionally, short selling may be subject to legal limits or regulations imposed by financial authorities.
Common Misspellings for GOING SHORT
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Etymology of GOING SHORT
The term "going short" originates from the world of finance and investments, specifically in the context of short selling in the stock market.
The word "short" in this context refers to the opposite of "long", which represents owning an asset or security. When an investor goes long, they buy an asset with the expectation that its value will increase over time.
Conversely, when an investor goes short, they borrow and sell an asset they do not own, with the belief that its value will decline. The goal is to buy back the asset at a lower price later and return it to the lender, thereby profiting from the price difference.
The term "going short" emphasizes the action of selling something that is not owned, which is why the word "short" is used in this phrase.
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