How to short stocks (NASDAQ)

[hlpsg]

Hi all,
Newbie here, great forum! I'm from Singapore and will like to learn how shorting stocks works when trading US stocks. In my country, when you short stocks you have a maximum time of 3 days to buy it back at whatever price the stock fluctuates at during the 3 days.

It seems in the US you can short stocks for an unlimited time period? Could someone more experience walk me through the exact steps to short a stock, including what costs are involved in the process, the likelihood of slippage etc? Thanks!

HL

 

[TheBramble]

HL - if you're trading intraday then the 3-day rule in Singapore wont be a problem. But I guess for longer term traders, shorting with that restriction could require some more detailed trade planning!

As for US stocks you can short some, not all stocks and only on an up-tick.

Commissions/slippage variable obviously depending upon the broker/platform/your average monthly trade volume and for slippage, speed of market.

 

[BBB]

The broker must be able to source the stock from somewhere in order for you to short it. Most will give a list of those that are shortable and the margin required. (You MUST have a margin enabled account)

Other than that, remember that the broker can call in the short at any time if he wishes - but I have never heard of this ever happening in real life.

 

[hlpsg]

Hi,
Thanks for all the replies. If stocks can only be shorted on an uptick that would make things tricky wouldn't it? You'd have to be going against the current trend....

 

[Mr. Charts]

Not really, you place a short limit order in just below the best bid, depending on where the bid levels are. In most shares the move tends to be to and fro, 1 cent down, 1 cent down, 1 cent up, 1 cent down etc., so you usually get your fill on that uptick.
Hope that helps.
Richard

 

[hlpsg]

Hi Richard,
Thanks for your tip. I'll have to go do more reading up on this.

HL