How to Short Sell on Robinhood

You cannot short on Robinhood, but we’re providing alternatives for how to short stocks, including other online brokers that allow shorts like Interactive Brokers and CenterPoint.

Robinhood is a popular trading platform that gives the average investor access to professional-level trading tools. However, it has a few shortfalls, one of which is that it doesn't allow you to short stocks. Fortunately, there are alternatives, such as put options and inverse ETFs, so you can still profit from a stock's downfall. Can you short on Robinhood? No, but there are some great alternatives. 

Alternatives to Shorting on Robinhood

While you can't sell stock short directly, there are some alternatives to shorting on Robinhood. Although, these options come with significant risk and are best left to experienced investors familiar with charting tools and analysis techniques to understand market movements. 

Put Options

A put option is inversely sensitive to a stock's price change, allowing investors to profit when a stock's price goes down. If the underlying stock’s price decreases, the put option’s value increases. 

Learning how to sell options on Robinhood gives traders a method to profit from the decrease in the price of a stock with Robinhood. Put options give the trader holding the option the right to sell the stock at a certain price without an obligation.

Pros

• Easy to set: You can easily create put options on Robinhood to profit from stocks' price falls. 
• Safeguard against falling stock prices: Buying put options can safeguard against falling stock prices in volatile markets and even generate profits if market prices go below the strike price.

Cons

• Costs: A put option requires a higher premium than a call option or standard stock purchase.
• Risk of loss: Any investment comes with the risk of loss. In the case of a put option, you may lose what you paid as a premium if the stock price stays the same or goes up. You also risk large losses when selling put options.

Inverse ETFs 

You could also benefit when the price of a stock goes down by buying inverse exchange-traded funds (ETFs). These funds are constructed using various derivatives to profit from the decline in stock value or security value.

Inverse ETFs are similar to short-selling a stock but use a different method, and they're available on Robinhood. Just like shorting a stock, inverse ETFs use futures contracts or derivatives to allow the trader to gain when the market or stock is bearish. It's another method of profiting financially from a stock’s price decline.

Inverse ETFs are simple to use. You just purchase the inverse ETF and wait for the underlying assets to decline in price to get a profit.

Pros

• Generate profits during bear markets: With inverse ETFs, you can generate profits even when the market or underlying stock declines.
• Hedge your portfolio: Inverse ETFs allow you to hedge your positions and portfolios to capitalize on either market direction to build your investments.
• Vast availability: Inverse ETFs are available for almost all stocks and market indexes.

Cons

• Costs: High fees associated with inverse ETFs make them a poor choice for many investors. 
• Risk: Holding Inverse ETFs for more than a day can lead to significant losses for an investor. Likewise, inverse ETFs can often lead to huge losses if the trader does not correctly judge and analyze the direction or trend of the stock.

Alternative Brokers to Robinhood for Short Selling

Many alternative trading platforms make it simple to sell short. If you want to look beyond Robinhood, consider stock brokers or these online brokers:

Best for Comprehensive Short Inventory: CenterPoint Securities

Active traders will enjoy CenterPoint’s platform because it offers fee reductions for high-volume trading and a personalized setup. You can take advantage of the per-share commissions and low-order minimums. The platform provides numerous order routing options for fast execution. The short inventory is comprehensive, with an extensive easy-to-borrow (ETB) list. 

Why We Love It: In addition to extensive borrowing lists for selling short, CenterPoint Securities has an in-house lending team for hard-to-borrow symbols.

Best for Shorting Resources: moomoo

Investors who like to short-sell can find stocks with a high short-selling ratio and investment opportunities on moomoo. It offers clear trading charts and tables, although moomoo notes that shorts come with a significant risk of losses. 

Why We Love It: Moomoo is a simple-to-use platform that provides adequate warnings about the risks of selling short for beginner investors without much knowledge. Moomoo can help you understand the risks and strategies when selling short. 

Best for International Markets: Interactive Brokers

Interactive Brokers is a popular, comprehensive trading platform that allows you to access over 150 global markets. You can buy a variety of stocks, options, futures, forex, bonds, and fund trading for excellent portfolio diversification. You won't have to pay a commission on any U.S. stock purchase or sale with the IBKR Lite pricing plan. IBKR offers a short sale calculator to help you understand exactly what you'll pay. 

Why We Love It: Interactive Brokers makes calculating the cost of borrowing stock easy, including the daily cost to revenues associated with short-selling stocks and bonds. It also provides information in three currencies (USD, EUR, and HKD).

Best for Analysis Tools: TradeZero

TradeZero is a specialist short-selling broker. For four years, it has consecutively won the Benzinga Global Fintech Award for Best Brokerage for Short Selling.

Why We Love It: TradeZero offers a pro platform for managing everything in one place, from daily scans to a watchlist, level two, and fast executions. Trading hotkeys can help give traders an edge.

Best for Low Fees: Webull

Webull is a commission-free brokerage platform that trades stocks, options, ETFs, and cryptocurrencies. Webull also offers paper trading to test trading strategies while you familiarize yourself with selling short. To short sell on Webull, you need a margin account and your net account value must be greater than or equal to $2,000.

Why We Love It: Webull is known for its low and no inactivity fees. 

Best for Large Scale Investors: Cobra Trading

Cobra Trading is a professional-level trading platform. To open an account, you must have a $27,000 minimum. You must also maintain a $25,000 minimum balance in each day-trading account.

Why We Love It: Customers like Cobra Trading because it gives them access to Wedbush, provides personalized attention to customer accounts, and offers effective compliance. 

Best for Professional Tools: TradeStation

TradeStation is the gold standard for advanced, active traders. It offers $0 trades to help attract new investors. TradeStation allows clients to short real stocks. It provides detailed instructions about short orders for various types of equities. 

Why We Love It: TradeStation offers a high-quality trading platform, including comprehensive research and charting tools, plus commission-free stock, options, and ETF trades. Better yet, you can learn from the active trader community.

Best for Customized Support: Guardian Trading

Guardian Trading is known for its services that prioritize speed, control, and cost efficiency. We provide the resources to help traders realize their full potential. It also offers competitive pricing and proactive client support to maximize their trading performance and profitability. You can also leverage Guardian Trading's in-house borrows & locates team to place shorts. 

Why We Love It: Guardian Trading offers optimized services, tools, and support designed specifically for active traders. With speedy and efficient product features, you can seamlessly place short sales. Reduce costs with a robust, easy-to-borrow securities list. 

How to Choose the Right Short-Selling Broker

When choosing a short-selling broker, you will need to consider the following factors:

• Availability of shares to borrow: Many brokers limit the number of shares available to borrow, reducing flexibility to trade as needed. 
• Fees and commissions: Short selling has notoriously high fees, which can cut into your profit margin. 
• Margin requirements: Margin account requirements vary by broker, but you're usually required to have 150% of the value of the position at the time the short is created held in a margin account, made up of the full value plus an additional margin requirement of 50% of the position. You can compare brokerage requirements to find more favorable terms.
• Trading platform functionality: The ability to quickly place trades, research tools, and current, actionable market data can make the difference between losses and profitability in selling short. The platforms above all offer efficient, reliable trading platform functionality. 
• Research and analysis tools: Advanced traders need excellent research and analysis tools to assess investments and identify market opportunities. 
• Customer support: Customer support varies widely by trading platform. Some offer 24/7 phone support or even phone trades, while others have limited customer service support. 

Frequently Asked Questions