Short selling is a trading strategy that bets that a certain stock will decline in value. It can be a speculative investment or hedge against the downside risk of a long position. To open a short position, the short seller borrows shares of a security. The short seller then sells the borrowed shares. The strategy is that the securities will decline in price and can be purchased back at a lower price and then returned to the broker. The risk of loss on a short sale is theoretically unlimited since the price of a security has no upside limit.