11 Best Brokers for Short Selling in October 2024

A List of the Best Short Selling Brokers for October 2024:

1. eToro – Best Broker to Short Stocks & CFDs
2. IG – Best Platform to Short Stocks with User-Friendly Interface
3. ActivTrades – Best Platform for Shorting Stocks with No Minimum Deposit
4. Interactive Brokers – Best Brokerage to Short Stocks for Experienced Traders
5. TradeZero – Best Trading Platform for Shorting Hard to Borrow Stocks
6. Lightspeed – Best Shorting Broker with Fast Execution of Trades
7. Cobra Trading – Best Trading Place for Short Selling with Hard to Borrow Stocks
8. Webull – Best Short Selling Broker for Intermediate Traders
9. TD Ameritrade – Best Shorting Broker with Flat Fees
10. Charles Schwab – Best Broker for Short Selling with No Inactivity Fee

Description of the Best Brokers for Short Selling for October 2024

Below content does not apply to US users

Best for: Short Selling CFDs

Founded in 2007, eToro is considered a very low-risk broker as it is highly regulated by the Financial Conduct Authority (FCA) in the UK and many other regulatory bodies elsewhere.

eToro is a simple-to-use broker that is accessible for beginner traders, while offering all the functionality that an experienced trader needs, and with the mobile app trades can be made wherever you are.

To find out more, read our eToro review.

Short selling on eToro involves selling an asset, such as a stock or cryptocurrency, that you do not currently own with the intention of buying it back at a lower price in the future. This strategy profits from falling prices.

Through eToro short selling, you borrow the asset from the platform and sell it in the market.

eToro short selling fees typically include borrowing costs and potentially overnight fees if the position is held overnight. It's important to be aware of these fees and consider them when planning your short selling strategy on eToro.

51% of retail investor accounts lose money when trading CFDs with eToro. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Short selling on IG allows investors to speculate on the decline of a financial instrument's price.

IG facilitates short selling through various financial instruments, including Contracts for Difference (CFDs), which are derivatives allowing traders to bet on the price movements of assets without owning them.

This method provides traders with the flexibility to trade on margin, meaning they can open larger positions with a relatively small deposit, amplifying potential profits as well as risks.

IG also offers tools and resources to manage risk, like stop-loss orders, and provides access to a wide range of markets, making it a versatile platform for short selling.

However, it's crucial for traders to understand the risks associated with short selling, including the potential for unlimited losses and margin calls, especially in volatile markets.

ActivTrades is a traditional CFD broker and has been trading for more than 20 years on 140 markets. ActivTrades is authorized and regulated by the FCA, CSSF and SCB.

ActivTrades allows you to short sell a variety of assets. To short sell an asset on ActivTrades, you will need to open a margin account. A margin account allows you to borrow money from the broker to trade.

Once you have opened a margin account, you can short sell an asset by following these steps:

• Select the asset you want to short sell.
• Enter the amount you want to sell.
• Click the "Sell" button.

The broker will then borrow the asset from another trader and sell it on the open market for you. When the price of the asset goes down, you can buy it back and return it to the broker. The difference between the price you sold the asset at and the price you bought it back at is your profit.

Best for: Experienced traders

Interactive Brokers was founded more than 40 years ago, and today it supports over 2.17 million trades that take place every day.

With lots of education available, this can be a great place for beginner or intermediate traders to learn the ropes, but for the advanced traders there are a huge range of assets available for long and short selling.

Interactive Brokers short selling allows traders to sell assets they don't currently own in anticipation of price declines.

However, this strategy carries risks, including potential unlimited losses if prices rise unexpectedly.

Interactive Brokers short selling fees will include borrowing costs and interest.

Additionally, there might be interactive brokers short sale restrictions on certain stocks, which could limit your ability to short sell those specific assets.

Best for: Finding HTB stocks

TradeZero is a commission-free broker that specializes in short selling. They have a wide variety of stocks available for short selling, and they make it easy to borrow shares.

TradeZero also has a number of tools that can help you identify and execute short-selling opportunities.

Here are some of the benefits of short selling on TradeZero:

• Easy access to shortable stocks: TradeZero has a large inventory of shortable stocks, including hard-to-borrow stocks.
• Low borrowing costs: TradeZero offers some of the lowest borrowing rates in the industry.
• Advanced short-selling tools: TradeZero provides a number of tools to help you identify and execute short-selling opportunities, such as a short-scan tool and a short-availability indicator.
• Commission-free trading: TradeZero offers commission-free trading on all stocks, including short sales.

Here are some of the things you should be aware of before short selling on TradeZero:

• Short selling is a risky trading strategy: You can lose more money than you invested if the price of a stock goes up instead of down.
• There are margin interest charges: You will be charged margin interest on the money you borrow to short sell a stock.
• You may not be able to borrow the shares you want: TradeZero does not always have shares available for every stock.

Best for: Fast execution of trades

Here are some of the reasons why Lightspeed is well-suited for short sellers:

• Extensive Borrowing Inventory: Lightspeed maintains a vast inventory of borrowable stocks, including hard-to-borrow securities. This means short sellers have a higher likelihood of finding the stocks they want to short without facing difficulties in locating shares.
• Efficient Locate Process: Lightspeed provides an efficient locate process to assist short sellers in finding available shares. The platform's short request feature allows traders to automatically request locates for the desired number of shares, streamlining the process.
• Real-time Shortable Stock Indicators: Lightspeed's trading platform displays real-time indicators indicating the shortability of stocks. This feature helps short sellers quickly identify stocks that are immediately available for short selling.
• Competitive Borrowing Costs: Lightspeed offers competitive borrowing rates for short-sold stocks, ensuring that short sellers don't incur excessive costs associated with borrowing shares.
• Advanced Trading Tools: Lightspeed provides a suite of advanced trading tools specifically designed for short sellers. These tools include short-scan tools, short-availability indicators, and risk management tools.
• Robust Trading Infrastructure: Lightspeed's trading infrastructure is built to handle high-frequency trading and short selling activities. This ensures that short sellers can execute their trades quickly and efficiently.
• Dedicated Short Selling Support: Lightspeed offers dedicated support for short sellers, providing assistance with locating shares, managing borrow costs, and navigating short selling regulations.

Best for: Access to HTB stocks

Cobra Trading, known for catering to active traders and short sellers, provides a robust platform for this kind of trading.

The process involves borrowing shares of a stock that the trader believes will decrease in value. After borrowing the shares, the trader sells them at the current market price.

The goal is to buy the shares back at a lower price in the future, return them to the lender, and pocket the difference as profit.

Cobra Trading stands out for its short selling services due to its extensive inventory of hard-to-borrow stocks, which are often not available on other platforms.

This feature is particularly appealing to short sellers looking for opportunities in less accessible markets.

Furthermore, Cobra Trading offers competitive commission rates, direct market access, and high-quality customer service, which are essential factors for active traders.

However, it's important to note that short selling involves significant risks, including the potential for unlimited losses, as there's no upper limit to how high a stock's price can rise. Traders engaging in short selling with Cobra Trading should be experienced and have a clear understanding of these risks.

Best for: Intermediate traders looking to start short selling

Webull is a mobile app-based broker that offers commission-free stock and ETF trading. With advanced charting and tools in a well-developed platform, Webull is the best place for the intermediate trader.

How to short a stock on webull?

Here are some tips for how to short on Webull:

1. Open an Account
2. Login
3. Search for the Stock
4. Check Availability
5. Select "Sell" or "Short" Option
6. Choose the Quantity
7. Select Order Type
8. Review and Confirm
9. Place the Order
10. Monitor Your Position

Best for: Combining short selling with other strategies

For more than 40 years, TD Ameritrade has offered thousands of trading instruments, making it easy for the savvy trader to combine short selling with other strategies and create a diverse portfolio.

TD Ameritrade short selling enables traders to sell stocks they don't own with the intention of profiting from price declines.

TD Ameritrade short selling fees can include borrowing costs and interest.

Best for: Diversification of portfolios

One of the most famous brokers on this list, Charles Schwab has lots of trading instruments available so you can short sell and long sell in order to grow your profits – and you can combine your shorting strategy with other ideas in the wide portfolio.

Charles Schwab short selling allows traders to sell stocks they don't currently own in anticipation of price declines.

To sell short Charles Schwab, log in to your account, search for the stock you want to short, select "Sell Short" as the order type, specify the quantity of shares you wish to short, choose the appropriate order type (such as market or limit), review the order details, and confirm the order to initiate the short selling process.

What Is Short Selling?

Short selling is a gamble that the price of a certain stock will fall, and you take advantage of this by borrowing a stock from a third party or a broker. You then sell it at a higher price, buy it back when the price drops and return it to the broker.

There can be huge profits available to traders who short sell, but it can be very risky, as the prices could rise.

Traditional stock trading comes with the adage of ‘buy low, sell high’ – and this is usually for a long position where you are waiting for a stock price to rise to make a profit.

Short selling is the opposite of this; a short-term trading strategy that hinges on a stock price falling – so it could be described as ‘sell high, buy low’ instead.

The process can make quick profits, if the market entry and exit is made at the right time.

To begin with, you need to find a place to borrow stocks to sell at a high price – and you can usually do this through your broker. Then, you open a sell position and sell the borrowed stocks.

When the market drops, you will then buy the stocks back at a lower price. The difference between the price you originally sold it for and the price you then bought it for is the profit you will make, and then you return the borrowed stocks to wherever you bought them from.

The huge amount of risk here comes from the volatility of the market – prices could climb instead of fall, and there is no ceiling to the price a stock can achieve.

You will need to buy back the stocks at whatever price they make in order to return them to where you borrowed them from. This is why short selling is considered an advanced strategy that should only be used by experienced traders.

It is worth considering that in order to short sell stocks, you will need to have a margin trading account with your broker, and there are some specific criteria you will need to meet with most brokers.

These criteria include a certain balance and a maintenance margin (a minimum amount that is held in your account), among other things.

The short stocks that can be borrowed and returned at the end of the trade are usually located by the broker, which means that you might need a specialist broker that is used to dealing with short selling and finding hard-to-buy stocks.

Short selling can be a speculative strategy as you’re gambling on a stock declining quickly – but some investors and portfolio managers use a version of short selling called hedging.

Hedging is considered a respectable and lower-risk protection of profits, while short selling has a negative reputation of being used by ruthless profit hunters who want to see a business destroyed on the stock market.

While it might be considered to be unethical to effectively bet against the market, short selling can help the market be more efficient by providing more liquidity.

What Is Naked Short Selling?

Naked short selling refers to the practice of selling a financial asset, such as stocks or other securities, without actually borrowing or possessing the asset at the time of the sale.

In traditional short selling, a trader borrows the asset from a broker or another party, sells it in the market and later buys it back to return to the lender, aiming to profit from a price decline.

Naked short selling, on the other hand, involves selling the asset without first arranging to borrow it.

What Is a Short Selling Ban?

A short selling ban is a temporary restriction imposed by financial regulators or exchanges on the practice of short selling in a specific market or on specific securities.

Short selling bans are typically implemented during times of heightened market volatility or financial stress when authorities believe that short selling could exacerbate market declines or contribute to destabilization.

What Are Short Sale Rules?

Short sale rules are regulatory guidelines and requirements that govern the practice of short selling in financial markets.

These rules are designed to ensure transparency, market stability and fair practices when traders engage in short selling activities.

Short sale rules can vary between different jurisdictions and financial markets, but they generally address key aspects of the short selling process, including disclosure, trading restrictions and reporting.

Why Choose a Specific Shorting Platform?

Most brokers will offer a margin account, although there might be some limitations on use for individual accounts, such as a minimum deposit and a maintenance margin amount.

Choosing online brokers that allow short selling will make finding the right stocks to short much simpler and completing the trades easier too.

To make the right decision on the broker you want to use, think about the following:

• Large stock inventory – Some brokers have custody of a number of stocks, and this makes it simple to borrow from your broker. This is especially useful if you have chosen a less popular stock to short – it is cheaper and more straightforward to borrow from your broker than it is to find the stocks and borrow them from a third party.
• Access to a stock loaner – For harder to find stocks, and those that are not in the custody of your broker, a stock loaner is a specialized service that can be used to create a short locate and find the stocks you want to borrow. There is often an extra fee for this service.
• Margin accounts – While most brokers offer a margin account to individual traders, the criteria for margin accounts can differ from broker to broker. Look out for the minimum deposit amount and keep in mind the maintenance margin – if your account drops below this, you might be subject to a margin call which forces you to liquidate your assets to cover the shortfall.
• Rates – Both long selling and short selling will have specific costs, like commission, cost per share, locate fees, account fees and trading fees. A broker that specializes in short selling will be able to give a transparent overview of these costs.

Short Selling: CFDs vs Spread Betting

CFDs and spread betting are quite similar, and on a macro level it might be difficult to understand the differences.

CFDs are contracts for difference.

They are a contract between the buyer and seller, where no stock changes hands – instead, the contract stipulates that the buyer must pay the seller the difference in value between what it is valued at now, and the value at the end of the contract.

Spread betting is like a CFD in as much as you will not own the asset, but you are betting on a price movement, which is a cost effective way to speculate whether the market is bearish or bullish.

Spread betting has a defined expiration date. Money is made through an initial bet on the change in points, multiplied by a specific dollar amount.

CFDs and spread betting can be used on a variety of trading instruments and are all about speculation.

Spread betting tends to have different taxation rules on profits – in many cases, they are considered winnings from gambling rather than capital.

CFD profits are taxable as gains, and this is one of the reasons why it might be more cost effective to choose spread betting.

The fees and charges relating to CFDs can be higher, including paying a commission and paying the spread, as well as financing if the position is held overnight (as it is considered an investment at that point). Spread betting is cost effective because it is commission free.

CFDs are not available in the US, where spread betting (sometimes known as spread trading) is largely permitted – so availability might be a consideration.

Short Selling: Easy vs Hard to Borrow Stocks

Stocks that can be used for short selling are listed every day, separated by their availability.

Every morning, the brokers that have custody of stocks will list a stock as either easy to borrow (ETB) or hard to borrow (HTB).

If you have a prediction about a stock that you think is going to decrease, then you want to be able to borrow it so you can take advantage of the movement, so availability of the stock to be borrowed is essential.

This availability is defined by a number of factors, including:

• Liquidity
• Volatility
• How many stocks have been borrowed already
• Percentage of float

These factors are always moving and dynamic, which is why they change every day.

The ETB list is usually populated by the most widely traded stocks – those at the top of the NYSE, for example.

In general terms, mainstream brokers might not offer HTB stocks for short selling, and it is more likely that a Direct Market Access (DMA) broker will have better access to HTB stocks because they work with independent clearing firms.

Short Selling Locates

If you are looking for a hard to borrow stock, you will need a broker that can perform effective and efficient short locates – but it is worth noting that there is a separate fee for this that will be added to the overall costs and will reduce your profits.

In many cases, the short locate fee will still have to be paid even if you decide not to move forward with the trade.

If you are looking to borrow some stock that is on your broker’s HTB list, then you will have to arrange a ‘short locate’ to be able to find the stock to borrow.

Some brokers have a short locate function built into their platform, and they will locate the stocks you are looking for through their network.

Understanding how your chosen broker deals with short locates will help you to become more flexible in your short trading – and the specific terms that will come with this service.

Short Selling: Borrowing Fees

Borrowing fees are an extra cost that needs to be factored into the decision on using short selling as a trading strategy.

In most cases, the borrowing fees are much higher on HTB stocks, thanks to the short locate fees.

You can check in advance to see what the borrowing fees would be for your preferred stock with your broker, but it is unlikely that you will get a dollar amount, as there are so many variables – you will likely have to perform your own calculations.

Knowing the fees and commissions that apply to your short selling strategy will ensure that you keep an eye on the profits that you are making.

Short selling stocks involves selling a stock that you don't currently own with the intention of buying it back at a lower price in the future, aiming to profit from a price decline.

Here's a step-by-step guide on how to short stocks:

Frequently Asked Questions

Final Thoughts

Short selling is not for the faint-hearted, and, in many cases, the intuition that experienced traders use to decide which stocks should be shorted comes with years of experience.

However, this high-risk strategy can provide some unbelievable returns – so if you feel confident enough about getting started and you have a ‘gut feeling’ about a stock that is about to plummet, you can try your hand at short selling with the right broker on your side.