A short position in forex involves selling a currency pair with the expectation that the value of the base currency will decrease relative to the quote currency, allowing the trader to buy it back at a lower price for a profit. For example, if a trader short-sells EUR/USD, they are betting that the euro will weaken against the US dollar. This strategy can be profitable in a declining market but carries significant risks if the market moves against the position. Proper risk management, such as using stop-loss orders, is essential to mitigate potential losses.