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I'm stunned how few traders know they can profit from a falling market

by , 06 July 2022
I'm stunned how few traders know they can profit from a falling market
I must say I'm quite surprised.

I had no idea that in 2022, there are a lot of traders who do not know that there are two ways to profit from the markets.

Whether the price moves up, you can profit.

Or if the market price crashes and burns, you can also profit BIG TIME.

And right now!

In fact, once you understand the concept - you'll only have one question for me…

Where o I find the next trade to profit from these falling markets?

Grab a tea or coffee and enjoy…
How you can profit from a rising and falling market

The beauty of trading is there are two ways to hold a position to profit.

The first way is to go long (buy) a position (CFDs, Lots or Futures) at a low price with the idea that the market will move up where you’ll sell it at a higher price for a profit.

This is the most common way.

The second way is to go short (sell) a position at a high price with the expectation the market price will drop where you’ll buy it back at a lower price for a profit…

Because derivatives such as CFDs and Futures are not physical assets but rather tools that simply expose you to the markets, it makes short selling possible.

You’re essentially just buying a contract and placing a bet on where the market price is likely to go…

If the market price moves in your favour, you’ll bank a profit. If the market price moves away from your desired direction – you’ll bank a loss…

How it works is a little bit more technical, but allow me to explain with an example…

How short selling works in trading

Let’s say you want to go short (sell) BHP Billiton as you believe the price is going to fall…

You’ll essentially go to your trading platform, click on sell (short) and place your trading levels.

In this case here is the trading position sent out from the
Red Hot Storm Trader Service.

Entry – R453.49
Stop loss – R482.00
Take profit – R410.00

And let’s look at the chart.
 

Right, so we have our trading levels.

And when we click “Submit order” the trade will open as a short (sell) position.

If the price drops below our entry price, we make a profit. If the price rises above the entry price, we will incur a loss.

With derivatives, we only gain exposure to the position rather than own it (such as with shares).

And so when you short (sell) a market like BHP Billiton, you’ll essentially borrow the shares from the market maker (your broker) at a higher price.

When the market drops and you want to secure a profit, you’ll then re-buy the shares back (at a lower price) which the shares will go back to the market maker and you will pocket the difference.

If this is a little too confusing, this may simplify it better...

Here is how Short Selling Works with a spider diagram

 
 

Now you know how short selling works in the market and how you can profit from a falling market price.

PROFIT FROM THE CRASHING MARKETS

Our last short trade we took with Red Hot Trader was Aspen. We went short the CFD at R156.81 on 16 May 2022.

Then on 10 June 2022, we closed the trade R141.27 for a 77% gain!

If you want more trading ideas on the market like this, then join our
Red Hot Trader group here.

If you prefer to trade global markets, then Trader X’s group offers the best trading signals on international markets, stocks, indices, Forex and even crypto currencies…




I'm stunned how few traders know they can profit from a falling market
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