Shorting explained - Winning when prices go down ?

When the market is going down, people saying "Tough times for traders now, huh?" they may not realize that in a down market, many traders like me actually thrive.

I’ll explain why by breaking down what “shorting” means.

Imagine two people, Jim and Mary:

• Step 1: Mary has a bar of gold worth $1,000.

• Step 2: Jim borrows this gold bar from Mary, so he’s now in debt to her for one bar.

• Step 3: Jim sells the gold bar immediately for $1,000 in cash.

• Step 4: The price of gold drops to $250 per bar, and Jim buys back one bar for $250.

• Step 5: Jim gives Mary back her bar, clearing his debt, and keeps the remaining $750 as profit.

That’s shorting! You profit when the price of an asset you "shorted" goes down, which is why down markets can actually be good times for traders who use this strategy.