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Short-selling stock means you borrow the stock, sell it immediately, wait till it drops in price, buy it back, return it and keep the profit.

This is how you make money on a declining issue.

Long-selling stock requires that you buy the stock, hold it till it increases in price and sell it then, keeping the profit. It's what you do if you think the stock's fortunes will improve.

Long-selling has limited risk--you can only lose all the money you put into it--and potentially unlimited reward. Short-selling has limited reward--the best you can hope for is for the company you shorted to go out of business, locking in your profit as all the money you received from the sale of the stock--and potentially unlimited risk.

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13y ago

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