Short Selling Definition

Learn the definition of short selling and other ETF terminology from the etf.com glossary.

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Reviewed by: etf.com Staff
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Edited by: etf.com Staff

Learn more about Short Selling

Short Selling in ETFs involves selling shares with the anticipation that their value will decline. This strategic approach allows investors to profit from falling prices by buying back the shares at a lower price later on. Short selling in ETFs is facilitated through borrowing shares and selling them on the open market, creating a potential profit if the ETF's value decreases. While offering a unique avenue for capitalizing on market downturns, short selling requires a comprehensive understanding of market dynamics and risk management due to the potential for unlimited losses in the event of rising prices.

Related Terms

ETF Glossary is etf.com’s collection of key terms and definitions related to exchange-traded funds. ETFs are investment funds that are traded on stock exchanges, and they can encompass a wide range of asset classes, including stocks, bonds, commodities and more. Given the diverse range of ETFs and the complexity of financial markets, having a clear understanding of ETF-related terminology is instrumental for investors looking to make informed decisions, manage risks effectively and navigate the evolving landscape of ETF investments.