the title is all my question :)
Is possible to short sell stocks without using CFD?
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CFDs are illegal in the United States but short selling is not.– user12515Apr 18, 2020 at 3:30
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1 Answer
Yes. Here's how:
- You borrow the stock from someone (paying them interest in return)
- You sell that stock on the open market
If you want to close your position, or the person that you borrowed the stock from wants it back, you have to buy the stock back on the open market. You profit if you buy the stock back for a lower price than you sold it for. If the stock price is higher, you will incur a loss.
Note that this is done through your broker, who may or may not support (or allow) short selling.
answered May 24, 2018 at 20:25
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Forced buy back by short seller only occurs if lender sells stock and it is non borrowable from another lender. If not borrowable, once notified, broker usually buys it back EOD unless you close it sooner. May 24, 2018 at 20:42
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so basically it is managed by the broker and is transparent for us, I mean if the broker allows to short, it should be the same as shorting with CFD (in terms that we only click "sell" button)? or shorting without CFD is more complex or has some advantage/disadvantage?– EnriqueMay 24, 2018 at 20:48
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Mainstream US brokers who allow shorting have a straightforward transparent process. They provide the borrow rate and the number of shares available for borrowing. The short selling mechanism is exactly the same as selling long stock. You enter the number of share and the price that you want and you click the Sell button. And as mentioned elsewhere, in the U.S, for stocks that have dropped 10% or more, there is the Alternative Uptick rule to contend with. That may hinder your ability to short at a given price. Depending on the numbers, a synthetic short with options may be an alternative. May 25, 2018 at 13:07