: How can I make a profit by selling a stock short? This link states: Shorting (or selling short) allows professional traders to profit regardless of whether the market is moving up or down, which is why professional

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How so? If i sell short, then i make a profit only if the price goes down so i can buy back at a lower price.

Yes, but if the price is going up then you would go long instead.

Shorting a stock (or any other asset) allows you to profit when the price is going down. Going long allows you to profit when the price is going up. In the opposite cases, you lose money.

In order to make a profit in either of those situations, you have to accurately assess which way the price will trade over the period of time you are dealing with. If you make the wrong judgment, then you lose money because you'll either sell for a lower price than you bought (if you went long), or have to buy back at a higher price than you sold for (if you went short).

In either case, unless the trader can live with making a short-term loss and recouperating it later, one needs a good stop-loss strategy.

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Being "long" - expecting the price to go up to make a profit - is a two step process:

1) buy

2) sell

Being "short" - expecting the price to go down to make a profit - is a 5 step process:

1) borrow someone else's asset

2) sell their asset on the open market to somebody else a third party

3) pocket the proceeds of the sell for your own account

4) buy an identical asset for a cheaper price

5) return this identical asset to the person that let you borrow their asset

if this is successful you keep the difference between 3) and 4)