Short selling

[[email protected] 2]

Hello,

 

I am a newbie. I have a few questions regarding short selling.

1. How can we know that a stock is available for short sell. In other words, how do we know if the broker has the stock, and we can borrow it for short sell.

2. Is there a limit for the volume we can borrow, and what is the price ? Is this information always available on the associated platform ?

3. When we borrow stocks from a broker, how fast can this be executed ?

4. What is the time frame given to a trader to return the stocks back to the broker ? Is it always the same for every stock ?

 

Thanks 

[Abiel 474]

1. In DAS, you will see a "S" o the montage (this is explained on Class 1 / Onboarding session)
2. The price is shown in the L1, L2 in the montage and in the chart (candlesticks) (this is explained on Class 1 / Onboarding session) The limit is your buying power, in case of high volatile stocks, the margin is reduced or non existent, this depend on your broker
3. In DAS about one second using marketable limit orders
4. In day trading we cover our shorts in the same day. If you swing trade, when short you would pay interest on the position size for each day you hold it overnight.

[[email protected] 2]

On 5/26/2020 at 2:41 PM, Abiel said:

1. In DAS, you will see a "S" o the montage (this is explained on Class 1 / Onboarding session)
2. The price is shown in the L1, L2 in the montage and in the chart (candlesticks) (this is explained on Class 1 / Onboarding session) The limit is your buying power, in case of high volatile stocks, the margin is reduced or non existent, this depend on your broker
3. In DAS about one second using marketable limit orders
4. In day trading we cover our shorts in the same day. If you swing trade, when short you would pay interest on the position size for each day you hold it overnight.

Abiel,

Thank you for the response. I don't have any trading platform e.g. DAS installed yet, nor am I registered to any Broker.

I am still in early phase of learning. Is there a cost-free way  to see if a certain stock is available for short ?

Thanks,

Saoer

[mhileman 21]

The only way to tell if a stock is shortable is within the platform you are using for that broker you decide to go with. 

[Abiel 474]

45 minutes ago, [email protected] said:

Is there a cost-free way  to see if a certain stock is available for short ?

You´ll need a trading platform or check broker´s Short Stock Availability List. Really this is  broker dependant, IB could have BYND stocks to short, and CMEG don´t. 

[[email protected] 2]

On 6/4/2020 at 3:50 PM, Abiel said:

You´ll need a trading platform or check broker´s Short Stock Availability List. Really this is  broker dependant, IB could have BYND stocks to short, and CMEG don´t. 

Abiel,

So... there is no way to know it from DAS Simulator, right ? I really have to have an account at a broker ? Thanks.

[Abiel 474]

Das sim shows IB short inventory.

[[email protected] 2]

4 minutes ago, Abiel said:

Das sim shows IB short inventory.

Abiel,

Just to clarify. It shows IB short inventory without having an account at IB ? Thanks

[Justin 262]

39 minutes ago, [email protected] said:

Abiel,

Just to clarify. It shows IB short inventory without having an account at IB ? Thanks

That is correct! You don't need an IB account and DAS sim will still show the short inventory.

[[email protected] 2]

Let's say I have 1000 shares of shortable stocks. I sell 2000 shares. 1000 will be sold, and other 1000 is shorted, right ? Thanks. 

[Bailey Nevener 83]

On 6/28/2020 at 1:45 PM, [email protected] said:

Let's say I have 1000 shares of shortable stocks. I sell 2000 shares. 1000 will be sold, and other 1000 is shorted, right ? Thanks. 

Let me see if I have you right.

First off, if the broker you are using has an inventory of shares to short on the current stock you are trading, then it will be a very high amount, like hundreds of thousands of shares.  This creates a bit of confusion on the first part of your statement, “Let’s say I have 1000 shares of shortable stocks”.  The broker holds the shares to short until you open a short position.

Second, now that you know you can short a much larger number of shares than 1000, If you sell 2000 shares, when you currently have NO position in a stock, then you will have opened a short position.

This short position will be read as “-2000” shares in the position window. That means in order for you to get out of your short position, also known as covering, you will have to buy back those 2000 shares from the market.  These shares are then automatically returned to your broker’s short inventory.  And whatever the amount the stock price went down during your holding period, will now be in your realized profit and loss.  You will now have a position size of 0.  There is no split of 1000 shorted and 1000 sold etc... 

However!  If you have a 1000 share long position and then you sell 2000 shares, you will have sold your original 1000 shares, and opened a short position of 1000 shares.  

This might be what you are asking,

Bailey Nevener