While such a strategy does offer the potential for profits, it's important to remember that the potential for loss is unlimited if the price of the stock you sell short increases. Buying to cover means that you purchase securities to replace those you sold short.
Investors sometimes place buy stop orders in an effort to limit the risk of short sales.
To make delivery of the stock sold, your broker or clearing firm, will borrow the security on your behalf and deliver it to the buyer. The transaction must take place in the short portion of your account. The stock must be available to borrow. Short positions are subject to buy-in at any time if your broker or clearing firm cannot continue to borrow the security. Short selling can increase your opportunities for higher returns if the price of the stocks you are short selling goes down.