Maximizing Your Return in Up or Down Markets

Remember at the beginning of this report when we said we’d show you the Three Simple Steps to Stock Profits?

We already learned about step one: picking profitable stock patterns. We’ve also covered step two: minimizing your risk. Now we’ve come to the final step that makes the system so unique: how to profit from stocks, even when the stock goes down.

It’s a common misconception that traders can only make money when the price of a stock rises.

Investors can make money anytime that they can predict a stock’s future movement – up or down.

It’s Time to Learn about Short Selling.

Short selling is the key to making cash in a down market. Here’s how it works in a nutshell

1. Identify a stock pattern that suggests a stock is headed down.

2. Borrow shares of the soon-to-decline stock from your brokerage.

• Example: Let’s say, right before the United Parcel Service pattern (above) breaks out and moves downwards, you borrow 200 shares of the stock.

3. Immediately sell these borrowed shares.

• Example: You immediately sell these borrowed shares of United Parcel Service at the price just below the support line: $98.50 per share, 200 shares = $19,700. You are now sitting on $19,700. But, of course, you still owe the brokerage 200 shares, which you don’t currently have anymore.

4. Wait for the stock to drop to your target price.

• Example: You wait for the stock to reach the target price, which in this example is $95.50 per share.

5. Buy the shares at the target price.

• Example: You use the $19,700 you made earlier to purchase 200 shares at $95.50 per share. That costs you $19,100 and leaves you with an extra $600 in your account.

6. You return the shares to your brokerage.

• Example: Return the 200 shares of United Parcel Service to your brokerage.

7. Enjoy your profits.

• Example: You earned $600, a 3% profit on $19,700. And even better, you made $600 when the price of UPS declined and many investors were losing money on the same stock!

If you want to learn more about short selling in detail, check out our Short Selling Guide.