With regular investing, you buy an asset (e.g. a share for $10) and sell it later. The most you can lose is that $10.
With shorting you borrow a share for $10, and sell it. Then you buy it back later and give the share back. The idea being that you buy it back for $8 and you’ve made $2 profit. But what if the price suddenly rockets up to $100? Now you’ve lost $90. More than your initial stake.
No.
With regular investing, you buy an asset (e.g. a share for $10) and sell it later. The most you can lose is that $10.
With shorting you borrow a share for $10, and sell it. Then you buy it back later and give the share back. The idea being that you buy it back for $8 and you’ve made $2 profit. But what if the price suddenly rockets up to $100? Now you’ve lost $90. More than your initial stake.
You’re confusing me. I’m just gonna ask ChatGPT.