Stock shorting execution times?

Question

I have traded stock long, however, I have never shorted a stock. In simulated trading, shorting seems to be as easy as taking a long position. Is this close to reality? I mean, when people describe the logistics of shorting, they talk of locating a seller, broker’s boxes, etc.

So, when shorting, are the execution times quick enough where a day trader could be profitable?

Incidentally, I will probably be trading through Interactive Brokers and trading symbol: DIA.

Answer 1

The index etf's like DIA, SPY and QQQQ are all very liquid and all available for short sale at the click of a button; no different than going long.



There are also short ETF's, called inverse etf's, and leveraged etf's of 2:1 and 3:1 on most stock indexes..

Answer 2

Um your forgetting something.



When your purchase a stock, you in fact are the owner of that share. If you make a purchase of 1 position for $10.00, your betting that the share price will in fact increase in value. You might also make a modest gain from dividends or possible selling the write to that share.



When you are shorting a stock your doing 2 things.



1. Betting that the share price will depreciate in value.

2. Borrowing someone else's stock position. Whether it's from an actual shareholder or financial institution.



In order to close your position you must "purchase" the share. Therefore, you are actually subjecting yourself to a potential "infinite" loss.



The location of the seller, broker's boxes are all carried through by the broker in which you are placing the trade through. It's quite possible that someone isn't allowing their share to be lent out to someone that wants to short DIA. In addition, a financial institutions number of shares for a company change hands very frequently. So your short can be called. Meaning, no matter where the share price sits. The financial institution will require that you purchase the stock to cover your position at any time.



The execution is solely based upon how many shares are available at the said financial institution at the time of the execution.

Answer 3

I don't thinking shorting is as easy as going long, but it is something with which to become comfortable. In general, markets fall faster than they rise.



In my experience, profits should be taken quicker when shorting, at least on part of the position.



Don't worry about the "logistics" of shorting -- your broker/dealer does all of that.



It doesn't matter what time frame you use -- if you know what you're doing you'll make money short-selling.

Answer 4

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