Selling Stock Short Explained
from Blain Reinkensmeyer
Alright, so you’ve always heard of someone going, “hey, I would short that sucker next week, there is no way it is going up.” You understand the main idea that you are betting a stock will go down, but how does it actually work? Selling short straight forward as is means you are selling stock you do not own to a broker, the broker pays you for those shares, then you buy back those shares (hopefully at a lower price) and pay the broker back. Let’s break it down now.
The short selling process can be broken down like this: Full-text: http://www.stocktradingtogo.com/2006/03/22/selling-stock-short-explained/