How To Short Stocks On Webull

How To Short Stocks On Webull

Online stockbrokers are well and truly here to stay, and across such a huge choice of platforms competing for your attention, Webull are one of the forerunners.

Having just formed in 2017, the speed with which Webull has separated themselves from the pack is simply outstanding. Launching their mobile app in May 2018, Webull targeted an internet-savvy younger generation of traders; newer, more active, more determined.

Decidedly skewed in the favor of the self-directed investor and their interests with its broad services list and competitive margin rates; does its slightly less than comprehensive feature list mean that Webull isn’t an application capable of short-selling stocks?

Moreover, is that something that a newcomer like Webull allows?

If you’re looking to expand your trading patterns and you’re already well-established with how it all works, you might be looking to try a more risky, but certainly profitable method of trading some new positions.

You may have heard of shorting from the news or even a Hollywood film, but with apps like Webull it’s certainly possible for the layman!

Below we take a dive into all there is to know about shorting stocks via Webull. Take a look!

Does WeBull Allow Shorting?

Many trading apps are very specific when it comes to what forms of trading behavior they allow on their platforms. Many traders who partake in Power Hour Stock trades, for example, will have their accounts flagged on major trading platforms such as Robinhood.

It’s good to know, however, that Webull does in fact allow short selling, on its platform.

Shorting can be performed with leverage on your margin account, and even some of the less readily-available stocks may be borrowed using the WeBull mobile app, or via the WeBull Desktop.

Note before getting started that WeBull’s minimum requirements for allowing you to short stocks via their platform, are that you own a margin account at Webull, and that you have a minimum net account value of $2,000 or higher.

What Does Shorting Mean?

‘Shorting’, sometimes referred to as ‘short-selling’ or ‘going short’ is a seemingly counterintuitive – but in practice, very effective –  profit-making method from trading stocks, where you have a strong belief that the value of the stock will decrease.

In order to short a stock, shares of that stock must first be borrowed from your stockbroker (in this case, Webull).

Those stocks must then be sold immediately (bear in mind that before that you will have to buy these stocks back at some point so that they can be returned to your broker).

Before the stocks are due to be returned to your stockbroker, you must purchase them again.

This is a certainty. If you have been correct about your assumption and the value of the stock has fallen, you can purchase them back at their much lower value and return them to your broker, keeping the profit for yourself.

What Are The Risks Of Shorting?

What Are The Risks Of Shorting?

Shorting is an excellent way of turning profit with trading, but it is not without its risks.

The main reason shorting is most practically better undertaken by serious traders or investment firms is because should your stocks increase in value rather than decrease as you had anticipated, the consequences can be simply catastrophic.

There is no limit to the amount at which the value of a stock can increase, and if the value of your shorted stock has risen dramatically then you will suffer a loss when you come to purchase them back to return them to your broker.

Remember, these are margins which can potentially go infinitely high. Bad shorts can and do lead to bankruptcies.

A high profile incidence of shorting gone wrong was the GameStop fiasco, where a protest movement of traders bought up GameStop stock en masse, while other traders were attempting to short them.

The value of the stocks therefore rose instead of plummeting, causing losses for the shorting traders as they were forced to sell the stocks back at the higher price.

How To Short Stocks On WeBull

If you fulfill the requirement to short-sell via Webull, then you can start shorting right away. Simply follow the below steps:

  • Open the WeBull account or app on your phone or computer
  • In the app, go to the ‘Watchlist’ tab  
  • In the search bar, type the name of the stock which you wish to short 
  • ‘Shorts’ are represented via a blue downward-facing arrow icon. If it is present, you may short-sell on this particular stock
  • Click the ‘Trade’ button 
  • Select ‘Sell’
  • When you are certain, you can then submit the order

The position of this short is displayed with the rest of your trades under the ‘My Positions’ tab. It will appear there listed as a negative quantity (see also ‘What Happens If Your Stocks Go Negative?‘).

You must understand that shorting requires you to borrow the shares of a company’s stock, which you then sell but must purchase back. WeBull borrows the stock for you and charges you a cost, which can be viewed in the margin account.

The margin loan rate on any given stock will change daily, depending on the conditions of the market.

Are There Any Additional Fees For Shorting Via Webull?

Beyond the borrowing margins, there are no fees for short-selling stocks via Webull- on one condition: the stocks which you borrow must be returned (you position closed) within the same day of trade.

Shares are borrowed for the shorted stock’s lender across Apex, another firm, which clears trades for Webull. If you plan to keep your position overnight because of something you know, then you will have to pay interest.

All stocks which have been shorted during an allocated dividend date will require you, the borrower, to pay the dividend back to the lender of the stock.

Luke Baldwin