Alright kiddo, let’s talk about shorting — and don’t worry, it’s way easier than it sounds!
Imagine your friend has a toy dinosaur 🦖 that everyone wants. You don’t own one, but you think soon it won’t be so cool anymore and people won’t want it as much.
So here’s what you do:
- You borrow your friend’s dinosaur.
- You sell it right away for $10 (because that’s what people are paying now).
- Then you wait… ⏳
- A little while later, the dinosaur is not popular anymore, and now it only costs $5.
- You buy it back for $5 and give it back to your friend.
- You keep the $5 difference! 🎉
That’s called shorting — it means you’re betting something will go down in price so you can sell high, buy low, and make money.
But here’s the tricky part! 😬
If the toy gets more popular and costs $15 instead, you still have to give it back — so you lose money instead of making it.
So shorting is like guessing a toy will get cheaper, but if you’re wrong, oops — you lose!
Grown-ups do this with stocks (pieces of a company), not toys. But the idea is the same: sell it when it’s expensive, buy it back when it’s cheap — and hope your guess is right! 🧠💰
Pretty sneaky, huh? Want to guess what toy might get cheaper next?
