Naked Shorting

Search Dictionary

Definition of 'Naked Shorting'

Naked shorting is the practice of selling a security that the seller does not own. This is done by borrowing the security from a broker and then selling it. The seller then hopes to buy the security back at a lower price and return it to the broker. If the price of the security rises, the seller will lose money. Naked shorting is a risky practice because it can lead to losses if the price of the security rises. It can also lead to market manipulation if it is done on a large scale.

Do you have a trading or investing definition for our dictionary? Click the Create Definition link to add your own definition. You will earn 150 bonus reputation points for each definition that is accepted.

Is this definition wrong? Let us know by posting to the forum and we will correct it.