Hi, Can anyone explain in simple terms what shorting is and how money is made from shorting? Thanks in advance.

Adie

You will probably get a better explanation than this from somebody esle. But simply put, you 'sell' shares that you don't own through your broker on the assumption that the price will fall, you can then 'buy' back in at the lower price and pocket the difference. Of course if the price rises, when you 'buy' back in you will have to pay the difference. You can also 'short' by spread betting.

Hope this gives you a start.

Rgds

PTH

It means selling shares and then buying them back at (hopefully) a lesser price after the share has gone down. Buy low - sell high. Only you do it in reverse. You do it if you think the price will fall.

The easiest way to imagine it is a customer coming up to you saying he wants an MG sports car and will give you 5200. You know where there is one for sale at 5000 - so you sell him the car on paper first, then later you go and buy the car for 5 grand, and sell it to him for 200 profit.

The snag is if the price has gone up to 5500 by the time you get there. Similarly, if the price of the share goes up you will lose money.

The main ways of doing it are via a spreadbet or a Contract for Difference (CFD).