Short sales

Many young investors don’t understand short sales. Yet, this is one of the ways the guys in the big leagues make a lot of their money. So how does it work?
This basically means that you’re trying to sell a stock that you don’t own currently. You’re hoping that the price is lower later on to buy it back and thus making a profit.
In other words, you’re hoping the corporation does poorly. Now, the risk involved in this is a lot greater than going long. Going long, the worst case that can happen is that you lose all of what you invested. Short sales however do not have a loss margin. If a corporation keeps doing well and going up in stock, then you could lose a lot more than you when you sold short. Thus, this is a lot riskier trade. Knowing how this works can really help if you have a knack for seeing failing corporations. And if you’re crazy enough to try it.