Is it possible to make money in the stock market, Financial Management

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Is it possible to make money in the stock market when the quotations are going down? What is credit sale?

There are three simple moves to make money when prices are going down: credit sale, futures sale and purchase of put options. Credit sale of a share implies borrowing it and sell it afterwards. For instance, we sell the share today at a certain price (we can say €10) but we owe a share to the institution that lent it to us. If the quotation of the share goes down to 8 Euros the following week, we buy the share and give it back to the institution that borrowed it to us and cancel out our position.

 


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