Here are the basic steps for shorting a stock:
- Check to see if there are shares available to borrow (usually a stock will be marked if it is hard to borrow – HTB – but is different for each broker).
- Place a sell order on the stock you want to short.
- Buy back the shares at a lower price for a profit or at a higher price for a loss.
With LightSpeed, they have a couple symbols for stock inventory. The pic below shows in the top right corner a red “T”, this indicates there is no inventory and the stock cannot be shorted.
In the pic below you will see a grey “L” in the top right corner. This means you need to request a locate with your broker to see if there are shares available. Sometimes you will have to a pay fee to borrow the shares, especially if they are hard-to-borrow.
Keep in mind that this can be different from broker to broker so make sure to reach out to their customer service to gain a complete understanding of how they shorting process works.
Important Note – shorting stocks can ONLY be down in a margin account and if you hold a short position overnight you will be charged interest based on the amount you are borrowing. If you day trade it, you will not be charged interest.