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First time shorting stock just want to make sure I limit my losses correctly. Say I short 100 shares of SPY and $272 and I want to get out(cover my short) if it goes above $285 would the following sequence be right?

  1. Initiate transaction Action:SELL SHORT 100 shares of SPY.

  2. Initiate second transaction Action: BUY Type:STOP 100 shares SPY at $285 stop price.

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There is absolutely no guarantee that the price of the stocks will not increase so fast that the trade can be executed at $285 per share.

If you don't want to create a potential vulnerability for unbounded losses, do not short-sell stocks. Or you could look at some derivatives that go up in value if the stock goes down in value, without the potential for unbounded losses.

My advice would be to not short stocks. In general, stocks go up in value as time passes. By short-selling, you are creating a position for you that goes down in value as time passes. That's an almost sure way to destroy your wealth.

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    That's good advice for the average Joe but shorting stocks and ETFs is quite profitable when one is experienced and practices disciplined risk management. Volatility is a trader's best friend.
    – Bob Baerker
    Commented Apr 9, 2020 at 19:30

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