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How to Short Sell on Webull?

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Short selling is when an investor sells his equity without owning them at that particular time. It is a speculative short-term strategy and ideally incorporated by day traders. Short-sellers expect the price of the specific shorted stock to fall. The whole concept is to short sell a stock at a higher price and then buy back that stock at a lower price.

Risk associated with Short Selling

One of the most significant risks associated with short selling is that investors are likely to lose more money than they invested. Let us understand this with an example.

For instance, if trader  X trades 1000 stocks long, and buys it for $100, his maximum risk is $100*1000 = $100,000. The stock’s potential to make a profit is unlimited because any price above $100 is a profit, even if the price soars up to $1,000 per share. Hence, limiting the risk and making room for unlimited profit.

Short selling, on the contrary, is the complete opposite. If a trader shorts a stock for $100 per share and sells 1000 stocks for $100 short, his profit potential is capped to 1000*$100=$100,000, and the risk is unlimited. Now, imagine the next day’s news about the company leads to a hike in the price to $300 per share, this puts the short trader into a loss of $300* 1000 shares = $300,000 overnight.

Short selling equity overnight without hedging or putting a stop-loss is never a good idea and it entails unlimited risk and requires additional fees to maintain a position overnight. However, short selling can be highly profitable for intraday traders when used with solid monitoring and trade management.

Webull: Short Selling, Minimum Requirements, & Fees

Webull enables short selling, where the investors can short equity with leverage in their margin account. A few hard-to-borrow stocks are available on Webull desktop and mobile app.

With Webull enabling short selling, it requires investors to have a margin account with the platform with a net account value of a minimum of $2,000. However, no fee is associated with short-selling equity intraday on Webull. Selling intraday means closing the position the same day before the market closes.

A trader can borrow the shortened equity from Apex, Webull’s clearing firm. However, one needs to pay interest if the position is to be held overnight, and the trader may have to pay a dividend to the lender if the stock has been shortened on the dividend dates.

How to Short on Webull?

Webull is a versatile trading platform and enables traders to short sell equity positions. Here is how you can do so:

  • Start with your Webull app main screen and click on “Watchlist” or search for the stock you want to short sell.
  • On the upper right corner of the page, look for a little blue downward icon. Using the Webull app, you can click on this icon to short sell your desired stock.

Financial Takeaway!

Short selling is a great addition to intra-day traders’ trading strategy. Within minutes, traders can make a substantial amount of money by shorting their position in a stock. Webull is a great platform for traders interested in using this intraday strategy!

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