Reply To: What does ‘going short’ mean in trading?

#199398
Steve

    Haha yeah, that’s actually one way to think about it — borrow the PS5, sell it now, buy it back cheaper later, and give it back. Pocket the difference.

    As for costs, depends how you short:

    • With CFDs, you usually pay a spread and an overnight financing fee (since you’re holding a leveraged position).
    • With direct shorting (like through a margin account), you’ll pay interest on the borrowed shares and maybe a borrow fee if the stock is hard to find (called the borrow rate).
    • Options (like puts) have an upfront premium, but no borrow fees.

    So yeah, shorting isn’t free — you’re paying for the privilege of borrowing or holding that position. Got to factor that into your risk.