The standard thing everyone understands is you buy a stock S1 at time t1 and sell it later at t2 (let this be S2). The difference (S2 - S1) is your profit. You

The standard thing everyone understands is you buy a stock S1 at time t1 and sell it later at t2 (let this be S2). The difference (S2 - S1) is your profit. You are hoping the stock price goes up. If it drops you lose money. Time(t) : ---buy(S1)------------------sell(S2)-----> In short selling, the buy's and sells are reversed, so you are hoping the stock price drops. Time(t) : ---sell(S1)-----------------buy(S2)------> Notice that if the stock price drops S2 - S1 is positive. Conversely, if the price rises you lost money. There are other technical details, but this is conceptually an easy and accurate enough way to think about it.