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Shorting

Strategy involving selling borrowed securities or contracts to profit from price declines, requiring margin and risk controls.

Shorting is the practice of selling an asset expecting its price to decline, allowing traders to profit from falling markets. In oil trading, short positions can be taken via futures, options, or swaps.

For example, a trader anticipating a supply glut might short WTI futures, buying back at a lower price to secure gains. Shorting requires careful risk management, as losses can be theoretically unlimited if prices rise.

Shorting is used for speculation, hedging, and portfolio balancing. Traders analyze fundamentals, technical indicators, and macroeconomic trends to time entries effectively.

In commodities and broader financial markets, shorting provides liquidity, market efficiency, and opportunities to capitalize on negative price movements.

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