If you’re bearish about the market, you expect the price to go down in the future.
So what should you do?
You’ll enter a short position.
This means you’ll short sell a financial instrument.
And the exact opposite of a short position is a long position.
Let me explain…
Let’s say EUR/USD is 1.1234 right now.
If you’re bearish on it, you can enter a short position at 1.1234.
This means that you’re selling EUR and buying USD.
And if you buy EUR/USD to close your position at 1.1134, you’ve earned 100 pips.
Let’s say Apple share price is $100 at this moment.
If you’re bearish on Apple’s share price…
You’ll enter a short position to short sell its shares at $100 each.
And if you buy Apple shares at $80 each to close your position, you’ll bag a gain of $20 per share.