Best Brokers For Short Selling

If you are familiar with trading and investing in stocks, then you know how difficult it is to make money without a solid strategy. Talking about strategies, no matter the situation, you’re either ‘going long’ or ‘going short.’

When you ‘go long’, you bet that the price of that particular stock will spike over time. So, you buy it at its current price and accumulate the profits over time.

On the contrary, when you ‘go short’, you technically borrow the stock from your favorite broker at the current price and wait for it to decline. Once it declines, you return the borrowed stocks to the broker at the new low price so you get to keep the profit.

Let’s say you borrow 10 shares of ABCD stocks from your broker at the current price of $250 per share ($250 x 10 = $2500). Should the ABCD stock lose value over time to $100, all you need to do is return the 10 shares to your broker ($100 x 10 = $1000). And this way, you get to keep the profit of $2500 - $1000 = $1500.

The good thing about short-selling is that it makes it possible for you to make money even when the stocks are plummeting!

Unfortunately, only a handful of brokerage firms are really good at this – and so let us take a closer look at some of the best brokers for short selling services.

Top 9 Brokers To Short Sell In 2022

1. TradeStation

Tradestation is a digital trading platform for self-directed traders and short-sellers in particular. The platform offers advanced trading technology and its site is designed to be user-friendly. Tradestation's website offers a variety of instructional videos and articles that are easy to understand.

The online tool allows users to trade ETFs, futures, mutual funds, options, and stocks in a single account. As such, if you're looking to short sell stocks, this is one of the only platforms that lets you do so. However, to do that on this platform, you'll have to open a separate account with one of their approved market makers.

Pros

  • User friendly
  • Relatively cheap compared to others
  • Automated trading functionalities and indicators
  • Remarkable information resources

Cons

  • Limited account-funding options

2. TradeZero

TradeZero is another digital broker that offers an assortment of brokerage services including options, forex, futures, and day-trading. Aside from that, TradeZero also allows traders to open different types of accounts such as corporate accounts, personal accounts, and joint accounts and so on. 

With TradeZero you can trade stocks for free (there is no commission), which makes it possible for anyone to make money from investing in the stock market.

You can also trade stocks through their online platform which has many tools including charts, news feeds and research tools that allow you to analyze companies before buying them or selling them short. You can also set up alerts so you know when certain events happen like earnings reports or other things that may affect your investments.

Pros

  • Round the clock customer support
  • It's easy to use
  • Mobile app that allows users to trade in real time and on the go

Cons

  • The mobile app does not have as many features

3. TD Ameritrade

TD Ameritrade is one of the best short-selling platforms available and it is not hard to see why. First of all, the company has a strong customer service reputation. TD Ameritrade is widely seen as one of the most customer-friendly brokers, and its parent company started out as a brokerage firm that specialized in far more than just stocks and bonds.

Second, it has the ability to short a wide range of assets. TD Ameritrade's short-selling platform can handle stocks, ETFs, mutual funds, options contracts and futures contracts. 

It also offers a number of specialized products for specific industries — an oil & gas trading platform with access to futures and options contracts; a gold trading platform with access to gold futures and ETFs; an international equity trading platform with access to foreign securities (stocks, bonds and funds).

As if that is not enough, it has an array of tools for research and analysis — all with free trial periods so you can test it out before committing to one or two years' worth of subscription fees. We also have to mention that TD Ameritrade has an easy-to-use interface that's easy enough for anyone to use without having to spend hours learning how things work.

The ability to trade stocks and ETFs while mobile phone apps give you full access to your account on your smartphone or tablet device from anywhere you have internet access.

Pros

  • You will not be charged to use the platform's advanced trading tools
  • Ideal for both experienced and novice traders
  • No transaction fee mutual funds available

Cons

  • You are only allowed to trade in the US markets

4. Charles Schwab

If you want to short sell a stock — that is, sell a financial instrument that you don't own and then buy it back later when the price has dropped — one of the better places to go is Charles Schwab. Not only does Schwab offer some of the lowest commissions in the market (although those are starting to creep up), but it also offers an easy-to-use, user-friendly interface for buying and selling stocks.

The main barrier for most people to short selling is the transaction costs. If you're going to be buying and selling stocks every day, it's just cheaper to buy them outright and let someone else pay you a fee. But with Schwab, there's no minimum amount; you can even open an account with $5 and begin trading immediately. Plus, if your broker messes up — something they seem prone to do — Schwab will reimburse you for any losses.

The company offers its clients a wide range of trading tools and platforms that they can use to conduct their short-selling activities. The investor can trade stocks and options through a standard web browser or mobile phone or on the company's platform.

Schwab offers its clients an array of research tools, including reports from independent providers like Morningstar that help investors make informed decisions about short-selling. In addition, the broker provides easy access to news and trending topics in the financial markets that can be used to decide which stocks to short sell at any given time. 

Schwab also offers a suite of calculators that help investors determine how much their positions are worth and what fees they will pay for each transaction.

Pros

  • Reasonable commissions
  • No account minimums
  • Strong market research
  • Full-service advice available

Cons

  • Limited trading platforms
  • No mobile apps

5. Moomoo

Whether you are a beginner investor or an experienced trader, you can try out the Moomoo platform and its many features to help you make smarter investment decisions.

The Moomoo app is a free investing app that offers a ton of features such as real-time stock prices, charts, analyst ratings, after-hours data and much more. It also provides you with insights into what other traders in the market are doing.

With all these features, there is no doubt that short selling on Moomoo can be much easier for you to execute.

One of the most important factors that make Moomoo ideal for short selling is that the app allows you to view the margin requirements for various securities. This means that if you want to short sell Apple stock, for example, you can see how much margin is required before placing your order.

This makes it easy for investors to see which stocks have higher margins and which ones have lower margins so they can decide which ones they should short sell or hold onto until they get their money back from those positions.

Pros

  • Cheap commissions make it great for short-term traders
  • No deposit required to open an account
  • Good research tools

Cons

  • Customer service could be better

6. Cobra Trading

If you are looking for a brokerage that will offer you rapid access to equity markets, then you have to consider Cobra Trading. They platform offers trading services to both established and novice traders. 

That said, we feel like Cobra Trading is best suited for active investors who need professional support and advanced trading tools at a reasonable price. Plus, it is not suitable if you are in the market for ETFs, mutual funds, or educational resources.

Cobra Trading does however offer supplementary features that make it ideal for investors who are looking to trade with a broad range of tools.

Pros

  • Great prices
  • Outstanding customer service
  • Great for beginners
  • Excellent educational resources

Cons

  • Limited investment products

7. Webull

Webull is another brokerage that helps you make money by shorting the stock market. It's an easy way to make money and educate yourself about the markets in an environment designed for people who don't have a lot of experience with investing.

One of the most noteworthy things about Webull is that it doesn't require you to own any stocks at all! To join, you simply deposit some money, and then invest that money with Webull. Webull will trade your investments for short-term income (anywhere from $2-$20 per day), and then return your principal to you when your investment matures.

One of the chief selling points for Webull is that it has very low fees. Most online brokerages will charge between 0.25% and 2% per year on long-term bonds or stocks, depending on how much you're trading, but Webull charges only 0.1% per year on investments held for less than six months. 

This makes Webull an attractive option for traders who want to experiment the market without having to carry the risks that come with trading stocks themselves or dealing with all of the paperwork involved if they do want to trade stocks.

Pros

  • Zero commission trading
  • Free real-time market data
  • Free stock research
  • Technical charting tools

Cons

  • Webull doesn't support mutual fund or bond trading

8. Firstrade

Firstrade is a discount broker that operates online with branches in the U.S and Canada. It is a great choice for beginner traders, offering an affordable commission structure. The broker has two account types, including an IRA and a taxable account, allowing you to invest in bonds, options, mutual funds, ETFs and stocks. 

Firstrade offers a suite of research tools that are free with your account such as real time quotes, extensive company information and access to analyst reports. What’s more, the broker also offers third party research such as Morningstar reports. 

And to top it all up, Firstrade provides an array of features that can help you manage your investments including portfolio analysis and performance tracking tools, mobile trading and a cutting-edge options platform.

Pros

  • Reasonable costs
  • Vast research tools
  • Easy to use

Cons

  • Customer support flagged for falling short in some areas

9. CenterPoint Securities

CenterPoint Securities offers some of the best short selling platforms in the industry. Short selling is a trading strategy that has been around for decades. The basic idea of short selling is to sell a stock or other financial instrument with the intention of buying it back at a later date, hopefully at a lower price. 

If you can sell high and buy low, you can profit from the difference between your sale and purchase prices.

Centerpoint Securities is a great option for short sellers because of their low cost, fast executions and low margin requirements. The low cost of Centerpoint Securities is well suited for short selling because as you sell shares short, your profits are credited to your account on a daily basis. Being able to realize gains quickly can help you to short sell efficiently by keeping your capital in play.

Centerpoint Securities low commissions structure also helps out short sellers because unlike the purchase of shares, you are paid interest on the sale of shares that you have borrowed from your broker. 

Being able to keep more of that interest helps you to pay for the costs of trading without reducing the overall return on your investments.

On the flipside, though, Centerpoint doesn't offer a cash management program, which could be deal breaker for some investors. Other online brokers offer this service and it can be useful for investors who want to consolidate their finances.

Pros

  • No software fees or platform fees
  • Low turnaround time
  • Low margin requirements
  • No inactivity fees or hidden costs

Cons

  • CenterPoint Securities doesn't offer a cash management program

Conclusion

Short selling, a method of financial trading, is a controversial practice that can be incredibly beneficial for you if you know how to use it. No doubt, it is an effective way to ride out a tough market, exit bad positions and get back some of your investment.

Hopefully, this list of top brokerage firms for short selling will make it a lot easier for you to profit even in bearish conditions.