In simple terms
To go short is to take exposure that gains when price falls and loses when it rises. Futures can be sold before being bought back; other instruments may involve borrowing, margin, or a derivative.
A sale is not always a new short
A sell order can open a short, increase one, or reduce an existing long. Net position after execution identifies the outcome. Likewise, a bearish bias creates no exposure until an order is filled.
Risk and closing
A short is commonly reduced or closed with an opposite buy in the same instrument, but costs, liquidity, and rules depend on the market. Quantity, contract value, and leverage determine the exposure. Going short does not automatically cap loss at the capital initially committed and does not prove the bearish thesis correct.
Sources
- CME Group, Understanding the Role of Speculators — Explains that futures speculation may take either long or short direction.
- CFTC, Futures Market Basics — Frames futures participants, contract obligations, and material risks.