Short Selling
Also called: shorting, going short
Borrowing shares to sell now and buy back later, profiting if the price falls — the opposite of a long trade, with open-ended risk.
A short seller borrows shares, sells them at the current price, and aims to buy them back lower to return them, pocketing the difference. It's how traders profit from declines. The risk is asymmetric and dangerous: a long can only fall to zero, but a short's loss is unlimited as price rises — and a crowded short can trigger a self-reinforcing short squeeze.
Shorting requires a margin account and locating borrowable shares, and is restricted when the SEC's short-sale rule (Reg SHO) is triggered after a sharp drop. The crowding of shorts is itself a setup long traders watch via short interest.
On StockSetups
StockSetups is long-only — it surfaces bullish setups, not shorts — but it folds short interest, days-to-cover and the Reg SHO short-sale-restriction flag into a 0–100 short-squeeze score, so you can spot heavily shorted names primed to squeeze higher.
Related terms
Get daily signals & real-time alerts.
StockSetups scans ~12,300 US stocks & ETFs after every close and sorts every long setup into four ranked lanes — each with a trade plan — plus an always-on engine firing 35+ real-time intraday alerts. Free for 7 days, cancel in one click.
Start free — 7-day full access →