There are a lot of experts out there who are claiming that the market will fall back down and create another great depression. In reality no one knows were the market will be for sure, but if it does go down there are still plenty of ways to make money.

Actually traders can make large returns faster in a bears market then in a bulls market. That is because stocks tend to climb up stairs and fall out elevators. There are 3 different strategies that allow you to make money during a stock market crash.

1. Short Stocks

Shorting is the process of borrowing a stock from your broker and selling it on the open market. The idea is to sell it before the stock is going to o down. This way when the stock does go down you can buy it back at that lower price and return it to your broker.

2. Buy Put Options

Puts allow an investor to have the right to sell a given stock at a given price at some point in the future. So, if you buy a put it will increase in value and make you money as the stock goes down. This is because even though the stock is going down in value you still have the ability to sell it at the same price.

3. Bear Call Spread

The last strategy involves selling call options. When you sell a call option you give another investor to right to buy the stock from you at a given price. As long as the stock stays below the strike price of the call it eventually expires worthless and you walk away with the money.

Of course if it goes up there is no limit to how high it can go, so the risk is unlimited unless you buy a higher call option. For instance if you sell the $50 call for $5 and buy the $55 call for $3 you would profit from the difference, $2. You would also limit your potential loss to $5 because even if the stock goes to infinity you can always buy it at $55.

Learning what caused the great depression and how to make money in that situation can help you to prepare in case we see another crash like the 1929 Crash