Short Selling

Short selling is a method that selling a current stock with the market price, but actually the stock seller did not purchase the stock with his or her money that he or she sold. He or she borrowed the stock and sold it, so he or she should buy back the same stock with the future value, which the stock buyer and his or her broker specified in the contract. Thus, if the future value of the stock value decrease, he or she would make a profit. For example, I sell the Stock A with $15, and I did not purchase that stock with my money. I borrowed that stock and sell it to the stock market, so I gain $15. However, I should buy back the amount that I borrowed before I and my broker specified the period of time. Thus, if the future value of the stock goes below $15, I make a profit. Nevertheless, if the future value of the stock goes over $15, I make a loss, and the amount of loss would be unlimited. The reason is that the price of stock could go up to $100 or more. Thus, if an investor invests through short selling, he or she should consider the short selling could bring unlimited loss. However, the maximum profit of the short selling is limited because the lowest stock price would be $.01. If I sold stock at $10, the maximum profit I can make is $9.99 from that stock.
Personally, I do not like the way of investment like short selling. The reason is that the profit is limited and the loss is unlimited. If an investor buys a stock with his or her money, the investor could estimate how much would the investor loses on his or her investment if the stock defaults. However, if an investor invests through short selling, he or she cannot estimate the loss of worst cases.

http://en.wikipedia.org/wiki/Short_selling