How do I "short" a stock?

EthanR answered 11 months ago …

Fuzball, if you are using an online brokerage, one of the choices in the trade menu, besides buy or sell, will probably be sell short. You would simply enter the number of shares and type of trade (market, limit, etc), then click on the sell short selection and enter your trade exactly as you would a buy or sell order.

A few things to keep in mind. You should put a stop loss order in above your short price, perhaps 1% above the most recent high. It is better not to short high dividend paying stocks, as you may have to repay the dividend, depending on when you short the stock.

If and when you feel that the stock should no longer be shorted (ie you want to take your profits), you simply "buy to cover" the stock that you have shorted. This should also be one of the choices on the trading menu.

If you are using a full service broker, then simply give him/her those instructions when you call. I would also suggest that you do some reading on the Internet or in books on trading on successful shorting strategies. It is a higher risk trade, but also a higher reward if done correctly. Good luck!