Short Selling at ETRADE
Bullish trades are only half the battle in the stock market. Bearish trades can also make money, and thanks to ETRADE’s shorting tools, it’s possible to enter short positions quickly and easily.
Preparing to Short at ETRADE
In order to place short trades inside a brokerage account at ETRADE (or any other investment firm), the account will need to be switched from cash status to margin status. At ETRADE, this task is simple to perform. On the website, click on the Customer Service link that appears in the upper-right corner. On the customer-service hub, find the link to upgrade an account’s margin status. If you have more than one account, you’ll need to select the account to upgrade. Each account that will be placing short trades will need to be upgraded.
Also remember that in compliance with FINRA regulations, a margin account must have $2,000 or more in equity before it can actually short anything.
Locating Assets to Short
ETRADE’s website has screeners for stocks, exchange-traded funds, and option contracts. Besides short positions on stocks and funds, long puts and short calls are bearish bets.
During our testing of ETRADE’s screeners, we found them easy to use with lots of search variables. Here are a few choices that can be employed:
- 13 day EMA
- Unusually High Call Volume
- Extended Hours Overnight Trading
- Morningstar Rating
- Market Return Within Category
- P/E Ratio
- 52 Week High
A search can be saved or exported as a spreadsheet file.
Employing a Security’s Profile
ETF and stock profiles at ETRADE have some information that bearish investors will want to take a look at. For example, there is a price-analysis tool from Trefis that displays a price estimate of the entered ticker symbol along with a projection of the market as a whole. From TipRanks, there are social sentiment scores from multiple sources. These scores are consolidated over a period of time and show bullish or bearish projections.
An earnings-move analysis shows the upcoming date of an earnings release along with the implied price move. Finally, analyst reports in pdf format are available, and many of these have trade recommendations.
On the Fundamentals tab on a profile, ETRADE displays the short interest of a stock or ETF as a percentage of the float (the number of shares currently available for trading).
Using the Margin Calculator
ETRADE’s website has a margin calculator that short sellers may want to take for a test drive. It can be found on the Portfolios page, which is under the Accounts tab (be sure to click on the Margin tab). In order to use the calculator, you first must have a margin account.
Alternative For Short Sellers
For short traders, a good alternative broker is Charles Schwab. It has a number of advantages: richer
selection of shortable products, the best trading tools, and paper trading.
Learn more...
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How to Short Stocks at ETRADE
To short a stock or ETF at ETRADE, pull up the regular trade ticket and select “Sell short” from the Action menu if you’re using the website or main mobile app. If you don’t see this choice in the Action menu on the website or regular mobile app, you’re not using a margin account.
On the Power platform, the regular Sell button must be used (there is no discrete choice for sell short).
After specifying the correct action, the next step is to choose the price type (market, stop, and limit are possibilities). Finally, select the duration (day is the only choice for a short trade).
On the desktop platform Pro, the Short button should be clicked after entering all relevant trade details.
After the Trade
To exit a short position, you’ll want to select “Buy to cover” from the Action menu on the regular trade ticket (website or mobile app). Pro has a discrete “Cover” button, while Power uses just the regular buy button.
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Cost of Shorting at ETRADE
ETRADE charges no special commissions for shorting. Option contracts on either the buy or sell side are 65¢ each.
ETRADE does not publish a list of hard-to-borrow stocks, although it does charge interest to borrow such securities. The brokerage firm has faced a lawsuit over the interest rates it has charged for HTB stocks, so be sure you know this rate on the specific stock in question. You may need to call ETRADE to verify the rate.
Updated on 4/7/2025.
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