Selling Short Is for Professional Traders Only

Selling short can be a difficult and nerve-racking business, especially when working with stocks. There may be extra fees involved, and if your broker is unable to borrow a particular stock, you may not even be able to put on the desired short position. And keep in mind that the overall long-term trend of the stock market is for prices to move higher, so you’re always trying to buck the long-term trend when selling a stock short. Finally, in theory, the potential loss on a short is unlimited, while buying a stock limits your losses to the sum of your initial investment.

Despite all the downsides associated with shorting, I can honestly say that it’s silly to assert that selling short is for professionals only. Not many individuals consider shorting, so there’s ample opportunity to make money at it.

If you’re interested in trying your hand at shorting, consider selling futures contracts short as an initial effort. The barriers for shorting futures contracts aren’t quite as high as those involved with shorting stocks. Plus there’s never a futures contract that needs to be borrowed — you just short and wait for a price drop to buy back.

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