Short selling can be very risky for both the investor and the broker. Brokers will often tell investors that only stocks above $5 can be sold short. Although this may be true for your particular brokerage firm, it is not a requirement set by the Financial Industry Regulatory Authority or the SEC.

Most brokerage firms will have a "short list," which details all securities the firm allows investors to short sell without any extra requirements. If you are looking to short sell a security that isn't on this list, your broker will have to call into the securities lending department to see if the brokerage has enough of the particular security for you to short sell. This list and the securities available for short selling will vary across different brokerages, and it is completely up to your brokerage to decide whether it will assist you in short selling a security.

For more on short selling, take a look at our Short Selling Tutorial.

  1. How long can a trader keep a short position?

    Learn whether there are any limitations on how long may an investor hold a short position, and explore the costs associated ... Read Answer >>
  2. Why does my broker allow me to enter only day orders for short selling?

    Put simply, brokerage firms restrict short sales to day orders because of the complexity of the short sale transaction and ... Read Answer >>
  3. When short selling a stock, how long does a short seller have before covering?

    The lender of the shares in a short sale has the ability to request the shares be returned at any time, with minimal notice, ... Read Answer >>
  4. What Happens When Borrowed Short Shares Are Sold?

    In a short-sale transaction, shares are borrowed from the lender and sold in the market. Read Answer >>
  5. How does one make money short selling?

    Short sellers make money by betting a stock they sell will drop in price. If it drops, the short seller buys it back at a ... Read Answer >>
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