| Making money in the stock market can be tough during | | | | tanked in the market and is currently now selling for |
| the best of times but when the economy takes a | | | | $30 per share. |
| downturn and spirals into recession, making money in | | | | What you do now is simply take your hundred dollars |
| the stock market can seem to be nearly impossible. In | | | | that you earned by selling your original borrowed share |
| this article today I'm going to give you some tips and | | | | and use $30 of it to buy a new share of stock at the |
| tricks on how to profit even during tough times in the | | | | current market price (of $30). You now take that |
| stock market. With these tips you'll be pretty far ahead | | | | share and give it back to your stockbroker because |
| of the game compared to everybody else. | | | | remember, you have borrowed a share from them |
| The most popular strategy for making money in a | | | | and you now have to pay them back. |
| tough economy is to engage in short selling. Short | | | | That's it! You've made $70 by borrowing a share |
| selling scares a lot of investors, especially a lot of | | | | when it was trading at $100, selling it, pocketing the |
| smaller individual investors because either they don't | | | | hundred dollars, waiting for the share to sink in price, |
| quite understand the strategy or they get nervous | | | | buying back in at the lower price, paying back your |
| about the potential open-ended losses that are | | | | stockbroker the share that you borrowed, and |
| possible based on the nature of short selling itself. | | | | pocketing the difference. That's all short selling is! |
| The fact of the matter is, short selling can be much | | | | There is a substantial risk involved in short selling What |
| easier than you may think. Yes, it is quite risky but | | | | happens if the stock doesn't drop in price? What |
| there are ways you can mitigate that risk fairly easily if | | | | happens if it in fact increases? Let's say that the stock |
| you know a few simple tricks. | | | | went from $100-$150. You still owe your stockbroker |
| Before I get any further along I should define what | | | | one share of stock and when he wants it back you've |
| short selling is in case you haven't ever heard of it | | | | got to give it to him which means you have to go out |
| before. Short selling is the act of borrowing shares, | | | | onto the broad stock market and buy a share for |
| usually from your stockbroker. You then sell those | | | | whatever it's currently selling at, in this case $150 which |
| shares at the current market price and pocket the | | | | means you will have lost $50. |
| money. Let's pretend that you sold one share short for | | | | People consider short selling very risky because there |
| $100. | | | | is no ceiling to how high the shares can skyrocket and |
| Now you simply wait. When you sell short you have | | | | as long as the shares keep climbing in price, you keep |
| made a bet that the market is about to turn down or | | | | losing money until you eventually buyback in to cover |
| at least that the particular share that you sold short is | | | | your position. |
| about to drop in price. Now let's pretend three weeks | | | | So there you have one very quick and easy way to |
| have gone by and the stock that you sold short has | | | | make money in a down stock market. |