A trader or investor who sells a stock that he does not own, hoping the price falls later on is selling short. This is a risky form of trading, as the market on the shares could rise on the investor.
The person must buy back or cover the stock, so the investor needs to be careful with watching price movement and direction.
Most broker dealers will permit this practice when it is done in a margin account. The stock trader will put in money above the proceeds of the short sell to cover the brokerage firm, in case the stock rises.
Selling short should only be for experienced investors and day traders.
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Short Sell Trading
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Penny Stock Investing
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