Short Selling Also known as taking a short positi

Short Selling

Also known as taking a short position this is the process of selling a stock with the hope of buying it back at a lower price. Short sellers believe the price will decline. The uptick rule requires short sellers to sell only on an uptick (the sale must be executed at a price higher than the last trade). This is to prevent short sellers from driving down the price and creating a self-fulfilling prophecy. Short selling involves borrowing stock (usually from a broker) to sell short and then using margin to finance the borrowing. If the price of the stock in question rises too far, the short seller will receive a margin call and be required to put up more money. A short squeeze occurs when the price advances so fast that short sellers are forced to cover their positions (buy the stock back), which drives prices even higher.