Short

From Traderpedia

Definition:
A position is one in which the trader benefits from depreciation in the price or value of the asset or security in question.


A short is traditionally thought of in terms of selling something one does not own by borrowing stock (usually from his broker's account) which can be described, for example, as selling short 500 shares. The hope is that the price will fall so that when the trader eventually buys back the stock, profits will be made. Buying back shares to exit a short position is referred to as "covering a short".

However, one is also considered to be short in the case where one will be the seller in the future. An example of this would be a futures contract in which one is to be the seller at delivery. One who is short a gold futures contract would be the trader expecting to deliver the gold in exchange for cash. As such, a decrease in the price of gold would benefit the trader.

A short is the opposite of being long.

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