How short selling stocks works
Short selling is profiting from a falling stock. You borrow shares, sell them at the current price, and aim to buy them back cheaper later, returning the borrowed shares and keeping the difference. It is the mirror image of a normal buy: you make money when the price drops. Brokers charge a borrow fee for the loan, and the position must eventually be closed by buying the shares back.
Worked example
You short 100 shares at $50, receiving $5,000. The stock falls to $38 and you buy back for $3,800, a $1,200 profit before the borrow fee. But if it rose to $70 instead, you would buy back at $7,000, a $2,000 loss, and the price could keep climbing. The gain is capped at the stock reaching zero; the loss has no ceiling.
Short selling on Volity
Holding real shares only lets you go long. To profit from a decline on Volity you short the stock as a CFD, which needs no share borrow and supports retail leverage capped at 5:1 on single stocks under CySEC rules. Negative balance protection limits the absolute worst case to your deposit, but the asymmetric risk of a short still demands hard stops and small size.
Why it matters
Short selling lets you act on a negative view and hedge a long book, but its unlimited-loss profile makes it the riskier direction, which is why beginners master long setups first. A short squeeze is the specific danger of crowded shorts. Related: going long vs short.
Learn more in our stocks trading guide.
