Is there a way to really profit from stock declines and market crashes? Yes there is and the way to do it is by shorting stocks.
When a person shorts a stock this is what happens:
For those who do not understand the mechanics of short selling, just take my word for it that you can make money when a stock drops.
The benefit of short selling is that you get to participate in the decline of a stock and make money from that decline. There are however risks that apply to shorting a stock. Such as when the stock gaps up and move way above your shorting price. In theory, your loses can be unlimited. However, with proper money management and a sound strategy, short selling can be a very lucrative and profitable trading strategy.
Do remember that stocks fall 3 times faster than they rise.
So you not only make money when a stock falls, you get to make it faster as well.
A good trader can make money whether the stock market is in a bullish run or in a bearish run. As you progress in this course you will learn that shorting stocks is just as easy as buying a stock.
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