Trading glossaryReviewed 16 July 2026
Definition
A short position has negative economic exposure to an instrument, generally gaining when its price falls and losing when its price rises.
In market context
Short exposure may involve borrowing and selling an asset or using a derivative that pays for downward movement. Loss potential can be very large because an instrument’s price can rise far above the entry level, while borrow, financing, dividend, recall, and liquidity costs may apply. A leveraged short can be liquidated during a temporary spike even if the price later declines.
Risk context
Unlike an unleveraged long holding, a short position does not have a natural maximum loss based on price reaching zero.
Source
Use the primary source for fuller regulatory or market context.