Short selling has long been recognized as one of the most popular ways of earning money online. Short selling is done with the anticipation of a future drop in price of a stock. Let’s explain this with an example; Mr. B believes (for some reasons) that the price of the stock X of a company ABC will decline in the near future. Let us assume that the price at the moment is $50 for that stock. He anticipates that the price will go down to $20. He goes to his broker and requests to lend him 500 shares of stock X of the company A. The stock broker is either paid in full cash or partially (through margin). Mr. B gets hold of the 500 shares and sells them at the rate of $ 50 per share. For the sake of example we assume that the share prices actually went down to $ 20 per share, as anticipated by Mr. B. Mr. B can now pay for all the shares at the rate of $ 20 per share. As you can see he got a profit of $ 30 per share and an overall gain of $30 X 50 = $ 1,500.

This whole process of selling shares for repurchasing with the anticipation of a drop in price is called short selling. Before the advent of internet we had to cling to the stock market screens to make this decision of selling back at that price of $ 20 per share. Things have changed for good now. New software has automated transactions like this. You can have software doing the entire job for you. With this new advancement you don’t need to sit by your computer and wait for the right time to make the transaction. This not only saves you a lot of time but also enables you to make a number of profitable transactions, simultaneously.