Most people believe that you can make money in the financial markets only when prices rise: buy low, sell high, and pocket the difference. But there is another strategy – short selling. It allows traders to profit when an asset loses value.
The essence of a classic short lies in borrowing. A trader borrows, for example, shares from a broker, immediately sells them on the market, receives the cash, and waits. If the share price falls, the trader can buy back the same quantity at a lower price, return the shares to the broker, and keep the profit from the difference between the sale and repurchase prices.
An important point is that in the classical version all transactions are carried out with real money. When a trader sells borrowed shares, they receive real dollars or euros in their account, and those same funds are used for the buyback. If the price goes up instead, they will have to repurchase at a higher price, suffering a real – and theoretically unlimited – loss. Moreover, to ensure that the trader can repay the borrowed shares, the broker requires a margin deposit. The higher the risk, the greater the margin. Borrowed shares are not free either: the broker charges a fee for their use, and in long-term positions, interest payments can eat up a significant portion of the profit.
Traditional short selling is a tool for experienced and well-capitalised market participants. George Soros famously crashed the British pound in 1992 by opening a record short position. He borrowed massive volumes of the currency, sold it, triggered a market panic, and when the pound collapsed, bought it back and returned it to the lenders, earning around one billion dollars in a single day. The film The Big Short depicts another side of the coin: a group of investors bet against the U.S. housing market in 2008. To do so, they had to enter into complex and costly deals with major banks, invest millions, and wait months for the crash to come.
Unlike classical shorting, contracts for difference (CFDs) allow you to profit from falling prices without borrowing the underlying asset. A CFD is essentially a wager you make with your broker on whether an asset’s price will rise or fall. Suppose you believe that Company X’s shares will decline. On a CFD trading platform, you simply click “Sell” to open a short position. If your forecast is correct and the price drops, you earn the difference between the opening and closing prices. If the price rises, the corresponding loss is deducted from your account. There’s no need to borrow, buy, or sell actual shares. The same applies to other instruments – currencies, cryptocurrencies, gold, oil, gas, and even stock indices.
A broker like XFINE offers access to more than 3,000 different assets from a single trading account. You don’t need bank vaults for gold and cash, or tankers and warehouses for oil storage and transport – and that’s one of the biggest advantages of CFD trading.
Another major benefit of CFDs is accessibility: any trade can be opened within seconds, even with a small deposit. Leverage, such as that offered by XFINE, allows you to open positions tens, hundreds, or even a thousand times larger than your own capital, while stop-loss orders enable you to predefine your maximum loss. In traditional shorting, if the market moves against you, the losses can be enormous. In CFD trading, you can set a strict loss limit, after which the position closes automatically.
Historically, short selling was the domain of large funds and professional traders. It required substantial capital, access to borrowed assets, and expertise in complex market instruments. CFDs have made this strategy accessible to private investors worldwide. Now all you need is a computer or smartphone, a modest deposit, and a trading account with a broker like XFINE to open a short position on any popular asset. It’s still real money and real risk, but the entry threshold is much lower, and access to global financial markets has never been simpler.
This is precisely why, when bitcoin fell from $68,000 to $15,000 in 2021-2022, holders of actual BTC coins suffered heavy losses, while many private traders using CFDs made fortunes simply by clicking the “Sell” button in their trading terminals. In a classical short, they would have had to find someone willing to lend them bitcoin, negotiate loan terms, pay interest, sell the coins in one place and repurchase them elsewhere – something nearly impossible for a retail investor.
To sum up, short selling is not a game of abstract numbers – it’s about real money that can be gained or lost. Both traditional shorts and CFDs are built on the same principle: profiting from price declines. The difference lies in how this goal is achieved. Classical shorting is complex, costly, and requires access to borrowed assets. CFDs remove these barriers, enabling any trader to profit from falling prices quickly, easily, and with lower costs – while maintaining full control over risk. That is why CFD trading has become the instrument that allows not only George Soros but anyone – even with very limited capital – to earn on market declines. For instance, the minimum deposit to open an account with XFINE is just 10 USD.
