Short Selling

I understand the concept of borrowing the shares and selling to the market and buying back cheaper. What I don’t understand is how to collect the cash if a profit is made. Where does the money come from? If someone is interested could you do a walkthrough on the trade from open to close?

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30 sec Googling yields this:

In a short sale, the short seller sells stock shares they don’t own. First, short sellers borrow stock shares from a brokerage firm. They then sell those borrowed shares at the current market price and receive the income into their account. Later, the short seller must decide to close out the short sale by purchasing back the exact number of shares sold to return the borrowed shares to the lender. Short sellers hope that the stock price drops to purchase the stock back at a lower price and profit the difference.

If the price of the stock rises and the short seller buys the shares back at a higher price, they lose money on the trade. When the price of the stock rises, short sellers may hold out in the hopes that it will decrease; since short sellers must eventually repay the broker, they risk losing more money. When the share price increases, it's possible that the broker might issue a margin call, requiring the short seller to put even more money into the brokerage account or close out the trade by repurchasing the stock at the current higher price.

Source: https://www.masterclass.com/articles/short-selling-explained#how-short-…

 
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