Selling short, also known as short selling, is a trading strategy in which an investor borrows shares of a stock and sells them on the open market, hoping to buy them back later at a lower price and return them to the lender. This strategy is used when an investor believes that the price of a stock is going to fall.

To sell short, an investor must first open a margin account with a broker. Margin accounts allow investors to borrow money from their broker to buy securities. Once the investor has a margin account, they can borrow shares of a stock from their broker and sell them on the open market.

The investor is then responsible for paying interest on the borrowed shares until they buy them back and return them to the lender. The interest rate charged on margin loans is typically higher than the interest rate on other types of loans, so it is important to factor in the cost of interest when considering a short sale.

If the price of the stock falls after the investor sells it short, the investor can buy it back at a lower price and return it to the lender, making a profit. However, if the price of the stock rises, the investor will have to buy it back at a higher price, resulting in a loss.