Short sellers look to profit from falling share prices. They borrow a share from an existing owner – paying a fee to do so – and then sell it. They then hope to buy the share back at a cheaper price later and make a profit.
Short selling is a hard way to make money and is very risky. That’s because share prices can only fall to zero, limiting the potential gains. As share prices theoretically can go higher and higher, the losses for short sellers are potentially unlimited.
That means that short-sellers have more incentive than most [...]
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