Brokers for Short Selling

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Traders who speculate on an upcoming decline often sell stocks short. But you can also use short sales to balance portfolio allocations and manage risk.

When you sell stocks short, you borrow the stock from your stockbroker, then sell the borrowed stock in the market and leave an open short position. You close that short position by repurchasing the previously sold stock, hopefully for a profit.

As a short seller, you profit by buying back the sold shares at a lower price and making the difference between the sale price and the purchase price on each share. If the stock goes up, you wind up paying a higher price for the short stock and take a loss. Selling short also has some important rules.

Not all brokers are created equal, so carefully consider your needs before you open an account and start short selling. Get started now with our recommended brokers.

Best Brokers for Short Selling

Here’s a list of Benzinga’s preferred brokers for short selling.

1. TradeZero

TradeZero won the Benzinga Global Fintech Award for Best Brokerage for Short Selling in 2020 and 2021. TradeZero offers free limit orders and marketable orders, including market orders and marketable limit orders, only cost $.005 per share. 

TradeZero also offers 6:1 intraday leverage on equity. 6:1 day trading leverage allows traders to maximize day trading opportunities in the market. You can get 2:1 leverage on overnight positions. 

get started securely through TradeZero’s website
Best For
Scalping
N/A
1 Minute Review

TradeZero is an online broker and free stock trading platform that provides everything you need to successfully share and trade, including round-the-clock customer support. TradeZero provides four different trading state-of-the-art software programs with its services, a locator for sourcing shares for shorting, commission-free trades, and real-time streaming, to name a few of the features promoted on their website. The software is a unique and (potentially) affordable option for anyone interested in stock trading.

Best For
  • Traders seeking high transparency and mobility in a stock trading program
  • Those attracted to commission-free trades
  • Those seeking a free version of a high-quality trading program
Pros
  • 24/7 live customer support
  • Uses ZeroWeb technology, a powerful level 2 online platform with direct market access
  • Mobile app allows users to access stocks and trade in real-time while on the go
Cons
  • Enforces Pattern Day Trading restrictions (accounts need to maintain a daily equity balance of at least $25k)
  • Mobile app could offer more features

2. Cobra Trading

Cobra Trading is the go-to broker for short selling with their exceptional access to borrows and direct access routing. Cobra gives you the ability to take advantage of the best opportunities in the market. The broker has been in business for nearly 20 years and maintains the perks of a small firm.

Cobra Trading exclusively opens and services active trading brokerage accounts above $25K. Cobra allows you to trade in a way that a “free broker” cannot.

get started securely through Cobra Trading’s website
Best For
Short Selling
N/A
1 Minute Review

Cobra Trading is a direct access broker focused on access to short opportunities and order execution. Cobra has multiple short locate sources, giving traders access to the best short opportunities in the market. Cobra Trading also specializes in offering comprehensive, responsive customer service throughout the trading day. We recommend Cobra Trading to high-volume traders and short sellers.

Best For
  • Short Sellers
  • Day Traders and Scalpers
  • Traders who are tired of using a “Big Broker”
Pros
  • Affordable commissions
  • The DAS Platform
  • Excellent customer service
Cons
  • No trading under 25K
  • Not a self-clearing firm

3. Interactive Brokers

Interactive Brokers is a comprehensive trading platform that gives you access to a massive range of securities at affordable prices. You can buy assets from all around the world from the comfort of your home or office with access to over 135 global markets. Options, futures, forex and fund trading are also available, and most traders won’t pay a commission on any purchase or sale.  

IBKR is geared primarily toward experienced traders and investors, but now with the availability of free trades with IBKR Lite, casual traders can also acclimate to IBKR’s offerings.

get started securely through Interactive Broker’s website
Best For
Stocks & ETFs
N/A
1 Minute Review

Interactive Brokers is a comprehensive trading platform that gives you access to a massive range of securities at affordable prices. You can buy assets from all around the world from the comfort of your home or office with access to over 135 global markets. Options, futures, forex and fund trading are also available, and most traders won’t pay a commission on any purchase or sale.  

IBKR is geared primarily toward experienced traders and investors but now with the availability of free trades with IBKR Lite, casual traders can also acclimate to IBKR’s offerings.

Best For
  • Access to international markets
  • Active traders
  • Sophisticated investors
  • Detailed mobile app that makes trading simple
  • Wide range of available account types and tradeable assets
Pros
  • IB SmartRouting provides significant price improvement vs. industry
  • Fractional trading allows investing regardless of share price
  • Industry’s lowest margin rates
  • Earn more by lending your fuly-paid shares
Cons
  • Beginner investors might prefer a broker that offers a bit more hand-holding and educational resources

4. TradeStation

TradeStation’s platform used to only be best for professional traders who needed a highly technical platform. Now, with TradeStation’s new TS GO account option, you’ll have access to professional-grade stock screeners and extensive educational and development tools to help them develop as investors.

get started securely through TradeStation’s website
Best For
Futures Trading
N/A
1 Minute Review

TradeStation is for advanced traders who need a comprehensive platform. The brokerage offers an impressive range of investable assets as frequent and professional traders appreciate its wide range of analysis tools. TradeStation’s app is also equally effective, offering full platform capabilities.

Best For
  • Advanced traders
  • Options and futures traders
  • Active stock traders
Pros
  • Comprehensive trading platform and professional-grade tools
  • Wide range of tradable securities
  • Fully-operational mobile app
Cons
  • Confusing pricing structure to leave new traders with a weak understanding of what they pay
  • Cluttered layout to make navigating TradeStation’s platform more difficult than it should be

5. TD Ameritrade

Award-winning broker TD Ameritrade is ideal for short sellers.

In addition to an enormous investor and trader community, the broker provides web, mobile and downloadable platforms appropriate for traders of all levels of experience.

get started securely through TD Ameritrade’s website
Best For
Options Trading
N/A
1 Minute Review

This publicly listed discount broker, which is in existence for over four decades, is service-intensive, offering intuitive and powerful investment tools. Especially, with equity investing, a flat fee is charged, with the firm claiming that it charges no trade minimum, no data fees, and no platform fees. Though it is pricier than many other discount brokers, what tilts the scales in its favor is its well-rounded service offerings and the quality and value it offers its clients.

Best For
  • Novice investors
  • Retirement savers
  • Day traders
Pros
  • World-class trading platforms
  • Detailed research reports and Education Center
  • Assets ranging from stocks and ETFs to derivatives like futures and options
Cons
  • Thinkorswim can be overwhelming to inexperienced traders
  • Derivatives trading more costly than some competitors
  • Expensive margin rates

6. Webull

Webull is a mobile app-based brokerage that features commission-free stock and exchange-traded fund (ETF) trading. It’s regulated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).

get started securely through Webull’s website
Best For
Intermediate Traders and Investors
N/A
1 Minute Review

Webull, founded in 2017, is a mobile app-based brokerage that features commission-free stock and exchange-traded fund (ETF) trading. It’s regulated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).

Webull offers active traders technical indicators, economic calendars, ratings from research agencies, margin trading and short-selling. Webull’s trading platform is designed for intermediate and experienced traders, although beginning traders can also benefit.

Webull is widely considered one of the best Robinhood alternatives.

Best For
  • Active traders
  • Intermediate traders
  • Advanced traders
Pros
  • No account maintenance fees or software platform fees
  • No charges to open and maintain an account
  • Intuitive trading platform with technical and fundamental analysis tools
Cons
  • Does not support trading in mutual funds, bonds or OTC stocks

7. Firstrade

Firstrade is a solid choice amongst the dizzying array of brokerages in the market; all fees are set to mirror (or beat) robo-advisor pricing. In fact, Firstrade offers free trades on most of what it offers.

Get started securely through Firstrade’s website
Best For
Mobile Investing
N/A
1 Minute Review

Easy to use and quick to master, Firstrade offers new and veteran traders a simple way to start investing with rock-bottom pricing. Firstrade’s platform is simple and streamlined and it extends this convenience to its mobile app. The broker has recently added a wealth of new app features that make options and stock trading faster as well. 

The company’s $0 commissions on stocks, ETFs, mutual funds and even options make Firstrade especially appealing for frequent traders. Firstrade also offers margin trading with new lowered rates. Firstrade also currently doesn’t offer access to futures or forex trading, and some more advanced traders may dislike the broker’s simple platform.

Best For
  • New traders looking for a simple platform layout
  • Native Chinese speakers seeking research and education tools in Chinese
  • Mobile traders who needs a secure and well-designed app
Pros
  • Simple platform easy enough for even complete novices
  • Quick Bar tool for easy trading throughout the day
  • Free access to Morningstar trading reports and other news in both English and Chinese
  • Secure mobile app with enhanced security and trading features
Cons
  • Simple brokerage platform doesn’t include as many charting tools as competitors
  • No access to futures or forex markets

8. Charles Schwab

Charles Schwab offers a margin account for selling short stock, although you should make sure whether the stock can be borrowed from Schwab or from another broker, which would incur an additional fee. Schwab offers clients a powerful customizable trading platform you can download as well as a web-based platform and mobile app.

get started securely through Charles Schwab’s website
Best For
Fund Investing
N/A
1 Minute Review

Charles Schwab is a solid choice for traders of all skill levels. It offers full access to the U.S. equity and options markets as well as 30 international markets. Traders can create a diverse portfolio with $0 commissions and no account minimums. Schwab’s margin trading is expensive but Schwab makes up for it with affordable futures and options trades, along with a comprehensive mobile offering.

Best For
  • 3 trading platforms perfectly in sync makes matching your platform to your skill level a snap
  • Excellent futures trading education for new traders
  • $0 account minimum means anyone can start trading
Pros
  • Wide range of available assets to trade, including futures and 30 global markets
  • SmartStreet Edge platform is powerful enough for advanced traders, yet easy enough for new traders to utilize
  • Unique educational resources (like infographics and podcasts) make learning fun
Cons
  • Margin rates are more expensive than competitors
  • More limitations on available margin than competitors
  • Expensive mutual funds

9. Moomoo

Moomoo is a commission-free mobile trading app available on Apple, Google and Windows devices. A subsidiary of Futu Holdings Ltd., it’s backed by venture capital affiliates of Matrix, Sequoia, and Tencent (NASDAQ: FUTU).

get started securely through Moomoo’s website
Best For
Active Traders
N/A
1 Minute Review

Moomoo is a commission-free mobile trading app available on Apple, Google and Windows devices. A subsidiary of Futu Holdings Ltd., it’s backed by venture capital affiliates of Matrix, Sequoia, and Tencent (NASDAQ: FUTU). Securities offered by Futu Inc., regulated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).

Moomoo is another great alternative for Robinhood. This is an outstanding trading platform if you want to dive deep into smart trading. It offers impressive trading tools and opportunities for both new and advanced traders, including advanced charting, pre and post-market trading, international trading, research and analysis tools, and most popular of all, free Level 2 quotes.

Get started right away by downloading Moomoo to your phone, tablet or another mobile device.

Best For
  • Cost-conscious traders
  • Active and Advanced traders
Pros
  • Over 8,000 different stocks that can be sold short
  • Access trading and quotes in pre-market (4 a.m. to 9:30 a.m. ET) and post-market hours (4 p.m. to 8 p.m. ET)
  • No minimum deposit to open an account.
Cons
  • No phone or chat support

Short Selling and its Importance in Day Trading

Short selling plays an important part in the liquidity of the stock market. If a stock becomes overvalued according to the market, then short sellers borrow shares to sell the stock down, thereby aligning stock prices to their fair value.

The practice of short selling combines the opinions of both bulls and bears to arrive at an equitable price for stock. Short selling provides other benefits to the market that include greater liquidity, which increases the opportunities for short term traders like scalpers and day traders.

More liquidity also leads to tighter bid/offer spreads that reduce overall costs to active day traders. In addition, shorting stocks increases capital formation and lowers the likelihood of bubbles and crashes due to the increased efficiency and more accurate pricing in the market.

With respect to large investors, fund managers allocate funds efficiently and hedge against long-term investment strategies. In combination with futures and options, shorting stock could be integrated into numerous highly profitable day trading strategies, including arbitrage and momentum trading.

What to Look for in a Broker for Short Selling

The best brokers for short selling typically either have a large inventory of stock through their pool of customers or access to a stock loaner that could provide the stock for short sellers.

Here are a few more things to look into:

  • Most large stockbrokers can obtain considerable amounts of stock through their big institutional clients and have whole departments dedicated to facilitating stock loans.
  • Smaller and less capitalized brokers may not be able to provide every stock to short and therefore may put restrictions on short sales.
  • If you have limited assets, also consider the broker’s margin account. You need a margin account in order to borrow shares from a broker. Stockholders and traders generally allow the broker to borrow their stocks and other holdings as collateral for existing margin debt balances, and that is one of the main ways brokers borrow stock. For example, Charles Schwab can borrow stock worth as much as 140% of the debit balance amount from a client’s margin account, but can’t borrow securities that are settled and paid in full.  
  • An interface you understand makes the investment journey that much simpler. If you’re spending your money in a place that confuses you, it’s only a matter of time before you make a mistake or miscalculate your investment.

Start Short Selling Today

Learn the unique rules of short selling and find a trusted broker to help you navigate the market. Our recommended brokers can help you sell short and offer educational support. From eTrade short selling to Moomoo, Interactive, Schwab and more, you can test the market, learn how to short sell and diversify your portfolio.

Reap the benefits of liquidity and start short selling today.

Frequently Asked Questions

Q

Are there risks of short selling?

1
Are there risks of short selling?
asked
A
1

The risk of short selling is the stock price goes up and you must cover the position at a higher price (taking a loss).

answered
Q

What is the role of brokers in short selling?

1
What is the role of brokers in short selling?
asked
A
1

Brokers serve as a middleman that allows you to borrow shares and they charge you interest.

answered

Turn to Webull

0 Commissions and no deposit minimums. Everyone gets smart tools for smart investing. Webull supports full extended hours trading, which includes full pre-market (4:00 AM - 9:30 AM ET) and after hours (4:00 PM - 8:00 PM ET) sessions. Webull Financial LLC is registered with and regulated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). It is also a member of the SIPC, which protects (up to $500,000, which includes a $250,000 limit for cash) against the loss of cash and securities held by a customer at a financially-troubled SIPC-member brokerage firm.