It is generally easy to understand how to do more. Let's take shorting wheat as an example (the seller may not have the goods in his hand when signing the selling contract) to illustrate how shorting is profitable:
When the price of wheat is 2000 yuan per ton, it is estimated that the price of wheat will fall, so you signed a (first-hand) contract with the buyer in the futures market. (For example, it is agreed that you can sell him 10 tons of standard wheat at any time within six months, at a price of 2,000 yuan per ton. (the value is 2000× 10 = 20000 yuan, which shall prevail)
Why should a buyer sign a contract with you? Because he's awesome.
When you signed the contract, there was no wheat in your hand. You are observing the market. If the market drops to 1.800 yuan per ton as you wish, you can buy 10 ton of wheat at 1.800 yuan per ton and sell it to the buyer at 2000 yuan per ton. The contract is fulfilled (your performance bond is returned to you). You have earned:
(2000-1800) × 10 = 2000 yuan-handling fee (generally10 yuan).
In practice, you only need to sell a hand of wheat in 2000 and buy a flat at 1800, which is very convenient.
If the price of wheat rises within half a year, you have no chance to buy low-priced wheat to close your position (fulfill the contract), you will be forced to buy high-priced wheat to close your position (the contract must be closed at the expiration), you will lose money, and the buyer who signed with you will make a profit.
If you close your position at 2200, you will lose money:
(2200-2000)× 10=2000 yuan+handling fee.