Short Selling

[Backwardation]

Its been a long time since I traded stocks and I am quite rusty on the mechanics of short selling. Assuming your broker has the stock you would like to short, what is the easiest way to get short in a falling market without incurring horrible slippage. My thought was to place a limit sell order just below the bid at my desired entry point. Your thoughts and comments will be appreciated.

Backwardation

 

[Don Bright]

Quote from Backwardation:

Its been a long time since I traded stocks and I am quite rusty on the mechanics of short selling. Assuming your broker has the stock you would like to short, what is the easiest way to get short in a falling market without incurring horrible slippage. My thought was to place a limit sell order just below the bid at my desired entry point. Your thoughts and comments will be appreciated.

Backwardation

Your method would work as long as the stock actually bounced back up to your price. The whole idea of the uptick rule is to keep institutions and traders from hammering a stock down by hitting increasingly lower price bids. By forcing the "uptick" you actually have someone else "inititiate" the order (buy from you, vs. you selling to them).

The risk to a trader is obviously that by the time the uptick occurs, the market may have turned around. We rarely advise using "short sells"...it is counter intuitive to immediate market direction.

Don

 

[IndexTrader]

Don,

What strategies do you advise other than "short sells" if the market is in a bearish trend?

Quote from Don Bright:

Your method would work as long as the stock actually bounced back up to your price. The whole idea of the uptick rule is to keep institutions and traders from hammering a stock down by hitting increasingly lower price bids. By forcing the "uptick" you actually have someone else "inititiate" the order (buy from you, vs. you selling to them).

The risk to a trader is obviously that by the time the uptick occurs, the market may have turned around. We rarely advise using "short sells"...it is counter intuitive to immediate market direction.

Don

 

[MACD_addy]

Here's a strategy.......... stock is puking, find an ARCA or ISLAND on the bid and hammer his ass! Then make sure you cover your short by being on the bid while the selling pressure is still there.

P.S the uptick rule does not apply to ISLD or ARCA shorts so you can sell into momentum and not have to worry about posting a short offer and getting run over by a truck.

 

[javaboy]

Can somebody confirm that you can LEGALLY short on island by whacking the ilsd bid for nyse stocks? Sounds too good to be true...

Thx.

JB

 

[B1010]

I don't think you can get filled on a downtick but if you throw a low offer out on an ECN when theres a large short seller on the exchange sometimes someones stupid enough to hit your offer and fill you. Its rare though.

 

[ertrader1]

DON does not short, BRIGHT does not short i guess....LOL.....

I guess they could sell calls or buy puts....LOL......

 

[trador375]

the ability to hit isld and arca on a downtick to get short only applies to nasdaq stocks . . . sometimes you can get short on them when the specialist is being a bitch about letting you get short with a DOT order, but you'll still need either a plus tick isld or arca bid to hit or you'll need someone to take your isld or arca offer . . . but for nasdaq it is definitely a nice way around the rule . . .

 

[topscalper]

Please which is the short selling rule?

We can only short stocks above $ 5 and ... what else?
This for overnight

and intraday? Can we short stocks below $ 5?

thank you

 

[brokerboy]

Quote from javaboy:

Can somebody confirm that you can LEGALLY short on island by whacking the ilsd bid for nyse stocks? Sounds too good to be true...

Thx.

JB

welcome to America of course its true but still has the uptick rule.