How to Short Stock in Etrade

okay what we're gonna do now is we're to

look at how to short stock in each raid

how to short stock in a trade if you

know it shorting stock is then ignore or

just skip the next minute but when you

short stock what you do is you borrow

the stock and sell it immediately for an

immediate gain and then you buy the

stock back later

hopefully the stock has fallen so let's

look at an example let's go to

interactive Interactive Yahoo charts and

let's look at Yahoo because I believe

yahoo has fallen

yeah so let's say back here in February

or in January you shorted Yahoo what

that means is you bought Yahoo when it

was trading at $44 and you sold it

immediately okay so maybe you did you

maybe you shorted one share and got 44

dollars in your account or maybe you

shorted a hundred shares I got four

thousand four hundred dollars in your

account in either case you get the money

in your account but you need a margin

account to do so because you're

borrowing the stock from someone from

the broker for example then you're

selling the stock and you're hoping that

the stock falls maybe all the way down

here and then you buy it back and give

it back to whoever you borrowed it from

okay so just imagine as like imagine you

borrow a car and then you give it back

later but the person you borrowed it

from doesn't know what you did with the

car so you borrowed the car and you sold

it for a nice twenty thousand dollars

and then you bought the car back a year

later for fifteen thousand dollars and

you gave it back to your friend who let

you borrow it now your friend isn't any

isn't isn't the wiser he doesn't know

what happened but you know that you made

five thousand dollars on that trade you

borrowed a car sold it for twenty

thousand dollars bought it back for 15

thousand dollars gave it back to your

friend now of course the car depreciates

in value but a stock doesn't stock is a

stock so when you give it back the

broker doesn't know that it's different

stock get the idea okay anyway even if

you don't get the idea if you're at this

video I'm assuming you want to

short I'm a stock so I'm going to show

you how to do it and it's basically in

each raid it's the same as buying a

stock go up to trade don't click on

anything just go up there and put the

cursor above trade move over to place a

trade and click on stocks it's going to

bring this to this page order type what

we're doing is a sell short we're

selling the stock and we're selling it

short which means we don't have the

stock we don't own the stock we just

want to sell it even though we don't own

it so we're doing that exact process I

described we're borrowing a stock


so let's say we want to sell short 100

shares of AIG it's the exact same as

purchasing a stock now price type again

we want to go with limit if you didn't

see the video on buying a stock in an e

trade you can watch that or you can just

follow along with me the limit is simply

telling the broker telling each raid

that you don't want the worst price if

you want the worst price go with market

it's easy it'll be filled automatically

but you generally want to get the best

price for whatever you're doing for your

money because you have to have a margin

account to actually short a stock if you

don't have this option right here sell

short that means you need to contact

each trade and say you want to be able

to short stock and they will say ok we

need to upgrade your account to a margin

account don't worry about the jargon

just know that if you don't have this

option you got to call you trade and get

that option ok so I'm going to do a

limit price and again the ask in the bid

represent what people want to buy it for

and want to sell it for inversely

respectively I'm sorry let me say that

again the bid is the price that people

are wanting to buy AIG for and the ask

is the price that people are wanting to

sell AIG for now obviously because you

want to sell you want this price but

you're not going to get it the buyers

don't want to buy it at that price

instead they want to buy it in in in

somewhere that's more reasonable for

them now you see 100 here and 100 here

that means the number of people who are

bidding on it and it just happens to be

exactly equal so there's a hundred

people who say they want to sell AIG at

64 bucks and 100 people who say they

want to sell it at 62 bucks now I'm

going to tell you the easiest way to get

any trade filled at a decent price is

simply take the average of these two and

the easiest way to do that is just add

them so I've done this already what it

looks like it change since I've done it

okay oh no it hasn't

okay so this is the ask price 6e 4.16

plus the bid price sixty two point

thirteen and then you divide it by two

and you get the price that you should

put in now because we're dealing with

dollars and we only have ten pennies for

ten ten cents we can't go in

we can't go you know out to the third

digit there we got a round so I'm gonna

round up and just say the limit price is

sixty three point one five and you don't

want to choose good for the day

generally you only have two options good

for the day or extended hours good for

the day

the only difference is that the extended

hours goes after the market closes ah

you could do either one I just figure

you're probably gonna trade while the

markets open so go for good for the day

and here you have it this is the entire

setup you just click on preview order go

through with the order and your your

account will have a bit of money not

taken from it but held in some place

that's the margin so the money you're

holding aside is kind of like insurance

for each rate in case the trade goes

really wrong because when you short

stock you expose yourself to unlimited

risk it's very possible that you can go

bankrupt on one trade I have previously

lost a lot of money shorting stocks so

be very careful but the idea here is

what you're doing is you're borrowing

AIG in this trade you're borrowing a

hundred shares of AIG and you're selling

them at sixty three bucks each so you're

immediately going to gain sixty three

hundred dollars in your account

and you're going to wait for a ID to

drop and then you're going to buy it

back let's say you buy back at 60 per

share you buy 100 back 60 per share so

how much money did you make well you

made 300 bucks on that trade and you

didn't even have AIG to sell so this is

great if you know that a stock or if you

suspect that the stock is going to fall

most people are just looking for buying

opportunities but if you're watching

this video you're pretty smart because

you're looking at both directions

however I'll say it again when you short

a stock there's unlimited risk Yahoo for

example after you short it right here

Yahoo could have maybe invented a new

form of the internet or cured cancer or

something weird like that

shooting Yahoo stock up to like a

million dollars a share and then you

would be bankrupt unless you're already

very wealthy you know so that's the idea


again this is what it should look like

sell short whatever your quantity is

whatever the ticker is limit trade

always limit the price which is halfway

between the asking the bid and then good

for the day that's it

preview order you're done