I am relatively new to investing and I never short. I understand how it works, and how to do it if I wanted. It just seems very risky unless you really know your stuff. Has anyone ever really been financially ruined due to over extending themselves on a short or shorting way too much and risking it all?
The most famous example is probably a trader named Jesse Livermore from early last century. You can read about him on Wikipedia. By shorting into the market crash in 1929, he amassed a fortune of $100 million (in 1929 dollars!), but eventually lost it all and committed suicide. A fictionalized account of his life is in the famous and interesting book "Reminiscences of a Stock Operator".
I'll assume its rhetorical and you're only doing this to eye poke the shorts,john kelly has shorted all the way from 19 but now claims a face saving trade at 50 has made him money. Funny how he only posted one he made money on.
The potential for a loss on a short is theoretically unlimited and there has to be a certain level of cash in an account or solid investments, whereas with a long position the worst you can go is to zero. You should look at it the same way you look at a long trade, if it's basically impossible to trade long on a stock as it travels downward and make money, the same is true for a short trade where the basic trajectory is up. It's a given that many a short has lost everything when buyouts, etc have happened.