What is “Short-Selling”

Question

I just cannot, for the life of me, understand how you make a profit by it.

In: Economics

Answer 1

Normal way: Buy low, sell high.

Short-selling: Sell high, buy low.

How do you sell something you don’t already own? You borrow it. And once you borrow something you have to give to back.

So you: borrow shares, sell high, buy low, return shares. The difference is the profit (or loss).