Going short means taking a position on falling prices. The trader opens a sell position without previously owning the underlying asset and profits if the price declines. The position is later closed by buying it back at a lower price.
In foreign exchange trading, shorting is a standard practice because every trade involves simultaneously buying one currency and selling another. With CFDs or futures, virtually any market can be sold short.
Going short is an essential part of many trading strategies and allows traders to remain active even in declining markets. The risk profile of a short position differs from a long position: in theory, losses are unlimited because a price can rise indefinitely, while it can only fall to zero.
