Short selling is a trading strategy where traders aim to profit from a decline in the price of an asset. In shorting, traders borrow an asset from a broker or another trader and sell it on the market with the expectation that the price will decrease in the future. Later, they buy back the same asset at a lower price to repay the borrowed amount, pocketing the difference as profit.

Shorting works as follows:

1. Borrowing: Traders borrow an asset (e.g., stocks, cryptocurrencies) from their broker or another trader. The borrowed asset is then sold on the market.

2. Selling: The trader sells the borrowed asset on the market, effectively taking a short position. They receive cash from the sale of the asset.

3. Buying Back: If the price of the asset decreases as anticipated, the trader can buy back the same asset at a lower price. The purchased asset is returned to the lender to close the short position.

4. Profit: The difference between the price at which the asset was sold (initially) and the price at which it was bought back (later) represents the trader's profit from the short sale, minus any borrowing fees or transaction costs.

Shorting allows traders to profit from downward price movements in the market, providing an opportunity to hedge against losses or generate returns in bearish conditions. However, shorting carries risks, including unlimited potential losses if the price of the asset rises instead of falling. Additionally, short sellers may be subject to margin calls or forced liquidations if the price moves against their positions. Therefore, shorting requires careful risk management and analysis of market conditions.