Many careless investors, when the market is booming, find it hard to imagine that a fall is inevitable and can happen at the most inopportune moment. But rational and experienced investors calculate in advance how they can make money on this fall.

Problems and risks

If a political event changes the situation in the world, it necessarily affects the financial markets and in one way or another changes the direction in which capital moves.

Investors, seeking to reduce risks, move into protected assets: dollar, gold, Swiss franc, reliable government bonds.

Moreover, investors are often even willing to pay for capital protection: the yield on 10-year German government bonds is negative, but the demand for them is still high. It turns out that investors not only do not receive coupon income on bonds, but also pay the German government for keeping money.

Financial analysts believe that owners of large capitals avoid risks. Today it does not have the best effect on the economies of those European countries, where the problems are long overdue: Greece, Spain, Portugal. Another problem is the lack of clarity with the global demand for energy. It will take more than a year, maybe even a decade, to reach the previous oil prices.

There are dynamics – there is profit

An overwhelming number of novice investors tend to take a one-sided view of the stock market. When the stock market is growing due to economic growth, it is logical to make money on it. But what should an investor do when quotations are declining and the market as a whole is falling? Despite detailed instructions from brokers on how to play down and margin lending, many people find it psychologically difficult to start investing with such initial positions.

The main obstacle is that there is no understanding of the stock exchange as a unique economic tool that allows you to generate income with both positive and negative dynamics. It is important that the dynamics are simply there.

Investment decisions

Brokers, being professionals on the stock market, have at their disposal and offer their clients various investment strategies and ready-made financial products that allow them to earn when playing on the downside. For example, structured products based on the forecast of the decrease of the underlying asset. The investor knows in advance the level of risk and income, and the main condition is that the value of the underlying assets must decline.

Certain strategies of trust capital management are also based on the downward game. The owner of capital cannot interfere in the work of managers, but regularly receives reports from them and is free to withdraw funds at any time.

The highest degree of responsibility for one’s money appears when working independently with securities, currencies and futures. Margin lending as a basis for investment in a falling market is different for each of these instruments, but the basis of work in all these cases is opening a short position and, as a consequence of a decrease in quotations, making a profit.

Thus, a fall in the stock market is not a reason to freeze investment activity, but a good opportunity to earn, and often even more than when quotations are rising.