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Short Selling - How it Works

 

It may sound puzzling that short selling is "sell high, buy low" - after all, how can you sell a stock before you buy it?  Simple - by borrowing it from another investor! 

Short selling is borrowing a stock from someone who'll allow you to sell it now, with the understanding that in the future you will repurchase the stock (called "covering") and return it to the lender.

In this simulation, all short sales are automatically covered 5 days (turns) later, when the shares are repurchased and returned to the lender.  You may cover your position anytime before the five days if you wish.