In order to short a stock, you must first borrow shares of the stock from your broker. You then sell those shares on the open market. If the stock falls in price, you will be able to buy back those shares at a lower price for a profit. If, however, the stock goes up a lot, you may be forced to buy back the shares at a much higher price, and end up losing more money than you ever had in your trading account to begin with.
