Besides buying low sell high and dividends, another way to earn in stock trading is selling short stocks. It is practiced by most expert traders. Short selling is simply "selling high, buying low", sounds confusing? then read this;
Selling stocks short is usually a taboo subject. Short selling,in the most literal sense, involves borrowing the shares of a company and then immediately selling them. The shares of stock must be returned eventually, so the second part of selling short involves buying the stocks back and returning them to the broker they were borrowed from. Essentially, this is the exact opposite of how the market usually works. The mechanics are the same as any traditional trade: You want to buy low and sell high. But the order in which the components take place is reversed in an ideal trade; short sellers will first sell high and then buy low. You are, as a short seller, hoping that markets will decline in price.
In the eyes of the market, though, short selling carries out the function as a traditional long sale, and it makes no difference to brokers whether you have a long or a short position as long as you do not run the risk of not being able to cover your position. The broker will still make money off of your commissions either way.
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