Most people trade stocks according to their bullish opportunities. Some traders never trade any other ways besides buying while the shares are low in price and sell them as their prices are going down.
Luckily for us this not the only time we can trade stocks. Lately we’ve seen many disturbing news about the stock market. Today you may hear the value of the market has been up by 10 points, tomorrow you hear it’s down by 50 points. It’s also called bearish market, and yes it is possible to trade in a bearish market.
Those news are freaking us all out because we want to make money from trading, not losing our hard earned money.
Here is the good news to balance all the bad ones you’ve been hearing.
You can actually trade stocks, even penny stocks using the short sell method during bearish bearish market periods. How does short selling work? It may sound weird to you if you’ve not heard of it before, but it’s pretty simple once you get a hang of it.
The way it’s done is that you borrow the shares of the stock you want to bet “against” from your broker. You have to contact your broker in order to do so. Some brokers may not accept short-selling but many of them would be very glad to to do this exchange with you.
If your broker does not have access to the stock you’re looking for, he could borrow the shares from another broker for you.
Timothy sykes, the owner of profit.ly, whom becomes a millionaire from trading penny stocks has compiled a list of 6 best brokers that you can use to short-sell your shares with no problem.
What do the broker gets out of it?
This is an important question because we all know there isn’t anything free on this planet, right? Well, this concept stays true to short-selling as well because the broker actually gets something out it. If it wasn’t for that there wouldn’t be any reason for them to accept short-selling for their customers.
Interests or fees will have to be paid to the broker in return for the shares. Once you’ve borrowed the shares you wait for the price to fall down. Remember you make profit when the price decreases from this method of trading, not the other way around.
Once the price has fallen to your desired level, you then buy the shares and return the borrowed ones while you pocketed the profits. Don’t be greedy as you would not be from trading long, the risk still exists.
Very simple, right?
Can I short sell penny stocks?
This is a very common myth in the penny stock market. Many people would be very quick to tell you there’s no way that you can short sell penny stocks. Fortunately, it’s very possible to short-sell them; as a matter of fact, many gurus prefer short-selling them than trading them long.
If you’re a penny stock’s trader you’ve got to learn how to trade in a bearish market. Trading in a bearish market is nothing else besides trading short.
What’s the risk of short-selling?
Any mean of investment comes with some risky sides, this is just the rule of the game. No one mean of investment is risk free. If you can find one, I’ll appreciate that if you can notify me about it in the comment box bellow.
The risk could be very similar to long sell if you know how to do it successfully. You may risk loosing your money if you short-sell and the price goes up after that instead of going down. It’s similar to long sell since you can lose your money if the price goes down instead of upward.
Knowing when to short-sell can greatly diminish your chance of having to deal with such a dilemma. Conducting your research is still important before you short sell.
Some people would short sell when a stock is inflated. Others would short sell a stock when they spot a reason that could cause a correction which would decrease the stock’s price as a result.
Finding these things requires some time on the internet or anywhere that would be best for you to do your research.
Many stock traders take the bearish market period as an opportunity to make money.
You too can do this same very thing if you do your due diligent to learn how to trade in a bearish market period, which we’ve been seen so much more often now.
It won’t be an easy task, but with practice any difficult thing becomes possible. Be positive and serious about why you’re trading, approach it with a sound mind, and as always research, research, and more research.