Short Selling: Because Markets fall Three Times Faster than they Rally

Short-selling http://www.financial-spread-be....tting.com/course/Sho (profiting from a fall in a share) is an essential part of any spread trader's weaponry, and these days it's really no more difficult than normal buying of shares, thanks to spread betting.

Falling prices generally worry investors with most stock traders preferring to exit their positions in a protracted bear run and cut their losses once prices keep declining. But spread betting allows traders to take advantage of volatile market conditions and potentially profit from both rising or falling markets.

This is because financial spread betting empowers traders to go both long (buy) and short (sell) on trades - meaning those choosing to spread bet on stocks can profit from a market which falls as well as rises.

Some basic statistics based from my own experience: markets really only trend 10% of the time; these trends can be down as well as up; stocks spend about two thirds of the time moving higher and one third of the time moving lower, also markets fall three times faster than they rally, so the profit potential is greater.

Having said that beware that as a leveraged trading product, should the market move against your trade it can also result in losses that exceed your initial deposit, making risk management tools, such as stop losses, critical to a trading plan.

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  Forex Trading