Shorting a stock (or selling short) ideally works like this:\n\nWhen you think a stock is going to go down...\n1. You borrow shares of stock you don't own, typically from your broker.\n2. You sell those shares at today's price.\n3. You wait for the stock to go down.\n4. You buy the same number of shares back at a lower price.\n5. You return the borrowed shares.\n6. You pocket the difference between the buying and selling price.\nSteps 1 & 5 are actually done automatically when you issue a short sale order with a broker.\n\nThe advantage of shorting is that you can make money when stocks are going down.  (With a normal stock purchases, you only make money if the stock goes up.)\n\nThe disadvantage is that in theory, you could lose an unlimited amount of money.  For example, if the stock goes up to five times its original value, you've just lost four times your investment.  (With a regular stock purchase, the most you can lose is the amount you originally invested.)
Can someone *simply* explain what a stock "short" is?