Generally in financial assets there are 2 positions that we can take:

Long position

First we buy the stock and then we sell it to close the position. Our goal is to sell at a higher price to make profit. If we don’t succeed and the stock price falls at a lower level we incur losses.

Short selling

First we sell the stock without own it and then we buy to close the position. Our goal is to buy at a lower price to make profit. If the stock price rises then we incur losses. But how is it possible to sell a stock that we don’t own? We will borrow it from the brokerage house we have deposited our money. So, we borrow the stock, we short sell it and then we buy it back to close the position and return the stock to the brokerage house.

Of course when using a trading platform the above procedure is accomplished by pressing two buttons. Instead of pressing Buy and then Sell (long position), you press first the Sell button and then the Buy button.

Notice also that when someone is long without leverage they can lose 100% of their capital and nothing more, but when someone is short without leverage they can lose more than 100%. This means that they will owe to their stock broker. When there is leverage the loss can be more than 100% in both cases.