| The stock market has become the venue for millions | | | | faster profits. Another reason is traders can take |
| of Americans who have learned to manage their own | | | | advantage of all the moves a stock has to offer. |
| portfolios online. For those who do their homework, | | | | Many stocks run in cycles due to various economic |
| the profits can be staggering! As a trader myself, I | | | | and seasonal conditions. Taking advantage of the |
| would also have to say that online trading is very | | | | advances in share price, as well as the declines offers |
| enjoyable. It's as much as a hobby as it is a way to | | | | the traders more opportunity to profit. |
| compound funds. Setting aside an hour a night to | | | | When a trader decides to trade stocks short they |
| scroll through charts and assessing the psychological | | | | must open a margin account. When you sell a stock |
| mood of each equity searching for that one stock | | | | short, you are actually borrowing the shares from |
| that exhibits the telltale signs of a stock that has | | | | your broker. You are selling shares of stock you |
| come to a top and is ready to drop in price really | | | | don't actually own. Let's say the current market price |
| gets my heart pounding. That might sound contrary | | | | of ABC Company is selling at $25.00 a share and you |
| to conventional wisdom but it's what many traders | | | | believe the price of the stock will decline over the |
| have come to know as quick profits. While most | | | | next several weeks. You borrow one hundred shares |
| investors are looking for the price of a stock to rise, | | | | of ABC and sell them at $25.00. Since you've done |
| some savvy traders are quite content finding a stock | | | | your homework correctly, you watch as the price of |
| that is poised to drop like a rock. Who are these | | | | ABC drops to $19.00 a share over the next several |
| traders? They're called short sellers and they have | | | | weeks and you decide to take your profits. To close |
| discovered what seventy five percent of average | | | | the short trade you buy the shares back at the |
| investors have yet to find out. | | | | lower price of $19.00, satisfying your debt of one |
| Selling a stock short is the exact opposite as buying | | | | hundred shares of ABC to your broker. But instead |
| and holding stock. It's profiting from a stock falling in | | | | of paying them back at $25.00 a share, you are |
| price rather than the more traditional method of | | | | paying them back $19.00 a share. Your profit is the |
| buying stock and profiting from the share price | | | | difference of $6.00 a share, or $600.00. |
| gaining in value. When one sells short they expect | | | | The next time you see your stock running out of |
| the share price to lose value and profit from the | | | | steam; don't just sell the stock to profit from the |
| decline in price. Why would a trader want to sell a | | | | advance. Try selling the stock short and reap the |
| stock short? Well, one reason is a stock will drop in | | | | rewards of a falling stock price as well. It's just as |
| price about three times faster than it took to | | | | easy and many times twice as exciting! |
| increase in price by the same amount. That equals | | | | |