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Shorting Stocks on Zacks Trade

If you’re interested in shorting stocks at Zacks Trade, keep reading. We’re going to tell you everything you need to know to get started—and more importantly, to succeed.

Cost of Short Selling at Zacks Trade

For any trade, long or short, Zacks charges a penny per share with a $3 minimum. This rate applies to equities priced at $1 or higher. Since we’re talking about shorting here, you’re probably not going to go short below that level—and we certainly don’t recommend it. If you need any help over the phone, Zacks Trade is one of the few brokers not to charge a fee.

Because you’re borrowing when you go short, you may incur margin interest. Margin rates at Zacks Trade start at 5.88% and drop to 4.68% for large balances.

A brokerage account at Zacks Trade carries no special fees like annual or inactivity fees. There is a $2,500 deposit requirement to open one, though. The best part of Zacks Trade’s fee schedule is access to the broker’s great software at no cost.

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Use the Short Locate Feature

Once you have your Zacks Trade account open, the first thing you need to do is locate stocks that are available for shorting. A brokerage firm has to actually find long positions that can be borrowed for shorting. If it doesn’t do this, that’s called a naked short position, and the federal regulators don’t like it. Zacks Trade’s shortable list is the same one that Interactive Brokers uses.

Placing Trades

There are two primary platforms that can be used to short stocks at Zacks Trade: a browser platform and a desktop system. The latter has the more powerful tools, so that’s what we’re going to focus on here.

Called Zacks Trade Pro, the software offers some good tools for short sellers. To get started, we recommend setting up the classic configuration on the platform. To do this, click on the bottom-left tab that says “Classic TWS.” On this screen, click on the down-arrow on the configure icon and then select the watchlist. This will generate a small window where a watchlist can be created. Add whatever stocks you’re interest in and then right-click anywhere within the window. In the drop-down menu that appears, select “Settings.”

A new window will appear. On the right-hand side there will be a list of columns, one of which will be for shorting stocks. Click on the green plus sign, and you’ll see the available choices. They are shortable shares, fee rate, rebate rate, and utilization. Adding these columns to the watchlist will display the information for each stock in the list.

Shortable shares simply means the number of shares available for shorting. During our research, Facebook had over 93,000,000 shares available for shorting. The fee rate is the interest rate Zacks will charge on the borrowed amount. The rebate rate is the Fed funds rate minus the fee rate. The utilization is a ratio of shares on loan versus shares held long.


Zacks Trade shorting stocks


To place a trade, you can right-click on a stock on your watchlist and then select “Trade” and then “Order Entry.” This will produce a pop-up trade ticket. It’s also possible to generate a trade ticket by clicking on the blue “Sell” button on a graph.

The order ticket incorporates many advanced features that short sellers will find beneficial, including direct-access routing, stop loss orders, and margin info.

If you happen to be away from your desk, you can use the Zacks Trade mobile app to place short orders as well. It doesn’t deliver the same trading tools as the desktop system, but we did find extended-hours capability and multiple order types.

Maintenance Margin for Short Positions

Zacks has a 30% requirement for stocks priced above $16.67. If the price is below that level, but above $5, the maintenance requirement is $5. Below $5, the requirement is 100%.

Alternatives

If you would rather simplify your short trades and avoid margin interest, you could buy put options. Put options increase in value whenever the underlying stock decreases in price. And you don’t need a margin account to do this.

If you still want to short stocks but Zacks Trade doesn’t meet your expectations, you could give Firstrade a try. The brokerage firm has $0 commission pricing and a very good tools.

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