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Three ways to make money trading a falling stock market

by , 26 October 2015
Three ways to make money trading a falling stock market
Trading isn't just about making money from rising prices, you can also profit from falling share prices.

You can do this by shorting shares or indices.

Instead of buying at a lower price and selling at a higher price, you hope to buy at a higher price and sell at a lower price, banking a profit.

So if you fancy short selling, what trading instruments can you use?

Let's take a closer look at three of them…


#1: Short the stock market by trading single stock futures


Single stock futures are contracts you can use to trade the stock market. As well as using them to buy shares or indices, you can use them to short shares or indices.

To trade single stock futures, you’ll need a derivatives trading account with a stock broker.


#2: Short the stock market by trading CFDs


A CFD, or contract for difference, is a contract between you and a trading party to exchange the difference between the opening price of a share and the closing price of a share.

You can also use them to trade indices.

As well as using CFDs to potentially profit from the rise of a share price, you can use them to profit from the fall of a share price.

You can trade CFDs through a stock broker or a trading company offering CFD trading.


#3: Short the stock market by spread trading


Spread trading is a form of trading where you trade a rand amount of your choosing on which way a share will move. You can do this to speculate on rising and falling shares.

You can spread trade through a trading company.

Whichever way you decide to short the stock market, ensure you have a thorough understanding of how the trading instrument works and the risks involved.

So there you have it. Three ways to make money trading a falling stock market.

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Three ways to make money trading a falling stock market
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