How to Make Money When Stocks Are Falling (Beginner’s Guide to Short Selling)
What most beginners miss about falling markets—and how to use it to your advantage.
If your portfolio has been bleeding over the last few months while the market slipped into correction territory, you’ve got two choices:
Sit on the sidelines and wait for the economy to bounce back.
Make money while the stock market falls.
Let me show you how to do the latter.
Quick Story
Thirteen years ago, I started learning to trade stocks.
Back then, I was strictly a long-term, buy-and-hold investor. So earning money in short-term trading wasn’t easy—and even harder when stocks fell.
But eight years ago, I made a big decision: I paid a professional trader $6,500 to teach me how the pros navigate the market.
That’s when I learned one of the most powerful lessons in trading: Waiting for prices to rise isn’t the only way to make money in the stock market—you can profit while stock prices fall.
And pro investors do it all the time to protect their portfolios and manage risks.
Here’s the Point
Most beginner investors only know how to make money when the market goes up.
But when prices fall, selling or sitting on the sidelines aren’t your only options. There’s a third path: short-selling.
“The goal should be that in the middle of a storm that puts all the less-seaworthy boats at the bottom of the ocean, your boat, battered as it may be, makes it back to shore. Short selling helps you do that.”
- Zeke Aston, Aston Capital LLC
The Solution: Short Selling
You’ve probably heard the phrase: buy low, sell high.
But in a declining market, the formula flips: sell high, buy low.
Here’s how it works:
As the video explains, the process isn’t much different from how you usually buy stocks—you just click a different button at the end.
However, here’s what’s happening behind the scenes:
Borrow shares of a stock from your broker
Sell those shares at today’s price
Wait for the price to drop
Buy them back at that cheaper price
Return the shares and keep the profit
Why does this work?
Your long-term positions will surely lose value in a declining market. But these short positions can earn money. Ultimately, this helps you do three things:
Offset the losses from your long positions.
Reduce the overall risk in your portfolio.
Keeps you from being “reactive” in a declining market. Most beginners panic and immediately sell everything they own. You won’t!
Pro tip: To short-sell stocks, you’ll need a margin account. I recommend always having a clear plan and risk management strategy before leveraging margin.
A Word of Encouragement
Short-selling isn’t something every investor needs to do, but understanding it does give you versatility when the market turns.
Professionals can earn money no matter what the market conditions are—we play defense just as well as we play offense.
💭 What’s Next?
In tomorrow’s PRO newsletter, I’ll show you how I used a version of short-selling to make $53,000 in the first two weeks of March—and valuable lessons I learned after giving back nearly 70% of it in week 3 (when the market increased for seven days).
Remember, success isn’t measured by how much money you make in the stock market—it’s really important to focus on how much you keep.
Until tomorrow,
Isaiah from Earn Out Loud