>How in the fuck does that happen?
It's called Naked Shorting and it's total bs.
Wait until you learn about all the Front-Running that takes place in various forms.
>Front Running?
Oh, yeah, it's the dooziest of all.
Being allowed to step in front of trades and scalp pennies all day long.
Also, how about knowing the order book ahead of time?
The Market is a complete scam no edge left untouched at this point.
Hang out on Zero Hedge for a week - you'll see plenty of stories about this and other fuckery.
It's in the scalping ballpark.
Basically, the big wig (Citadel/Blackrock) types have High Frequency Trading (HFT) algos in the network that see buys/sells a fraction of a second before they execute and can step in front of them to their advantage.