A short position refers to a trading strategy wherein an investor sells a security they do not own, with the intention of buying it back later at a lower price. Generally, traders take short positions when they believe the price of an asset will decline in the future. This involves borrowing the asset from a broker and selling it in the market, effectively betting against its value. If the price drops as anticipated, the trader can repurchase the asset at a lower price, return it to the lender, and realize a profit. However, if the asset's price increases, the potential losses can be unlimited, making this strategy inherently risky.
