How to Short Stock in a Margin Account

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Shorting stock in a margin account is not allowed by brokerage firms most of the time because the money used in a margin account is borrowed, and shorting stocks involves selling before you own the stock. Concentrate on long-term stock purchases in a margin account with insight from an investment manager in this free video on stocks.

Part of the Video Series: Stocks & Mutual Fund Investments
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Video Transcript

OK how to short stocks in a margin account. For 99.9% of the time, your brokerage will not allow you to do that. You're basically when you are shorting a stock, you're selling it before you own it and if you're already in margin, you're borrowing that money. So to borrow the money to sell something that you don't own yet, you've sort of got a double negative there so the brokerage house is not going to allow that to happen. I will say 99.9% of the time because there's going to be, there will be exceptions, certain where you may find that option available but my best advice would be A, don't do that, don't short a stock unless you really know what you're doing and if you're in a margin account, really concentrate on buying things long and getting that money back into your cash balance.


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