Readers of this column the past several years likely remember the warnings made by articles about the danger of selling stocks short.

Indeed, those risks still exist. The market has an upward bias, so timing is even more critical. Losses from short sales are theoretically unlimited. If you short a thinly traded stock, market-makers may try to pump up the price and run you over.

However, an advanced investor can use a short-selling strategy in certain market conditions to make substantial gains. To improve the odds of success, one should follow a set of sound rules based on historical studies, cold hard facts and confidence in the fact that human nature doesn't change.

That's why IBD has published a new book, "How to Make Money Selling Stocks Short," co-written by IBD founder William O'Neil and Gil Morales, chief market strategist and money manager at IBD sister firm William O'Neil & Co.

Short selling is the sale of stock borrowed from a broker. The short seller hopes to buy back those shares at a lower price and thus score a profit.

The best time to sell stocks short is during bear markets, because roughly three out of every four stocks follow the market's general trend. The major indexes also see long periods of sideways action.

In these conditions, look for the start of a big sell-off by a former leader that has already topped. If your timing is right, you can achieve gains of 20% to 30% or more over a relatively short time frame. After all, what goes up a long way must come down. The 2000-02 bear market showed just how hard a former leader -- from Cisco to Sun Microsystems to Tyco -- can fall.

To increase the chances of success, every rule must be followed. Modifying them or adding one's own rules usually leads to disappointing results.

The book has three parts: "How and When to Sell Stocks Short"; "The Anatomy of a Short Sale"; and "Models of Greatest Short Sales." The third chapter has 146 pages' worth of commentary and large, easy-to-read weekly charts of model stocks that plunged. The charts show where head-and-shoulder patterns and late-stage bases formed and the right place to short.

Chinese Internet Sina (NasdaqNM:SINA - News), a big winner in 2003, is featured on Page 190. As the weekly chart shows, even stocks that fall hard can come surging back (point 1). That's why profits should be taken at 20% to 30%.