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How to Short Stock in ThinkorSwim
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Dec 17, 2022
In todays video we’ll be going over how to short stock on ThinkorSwim. Throughout this video we’ll go step-by-step through the process of shorting stock on the ThinkorSwim platform. There’s no special button you need to hit. You simply need to put in a sell order on a stock you don’t currently own. This will automatically be a short order. It’s all automatic, but what you’re essentially doing is borrowing shares from TD Ameritrade, then immediately selling those shares. Later down the line you’ll simply need to buy back those shares to cover the position. So remember, you sell to open. Then you buy back those shares to close. You then get to keep the difference.
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Hey everyone, welcome back to the Thinkersome tutorial series. In today's video, we'll be going over
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how to short stock on the Thinkersome platform. Now, before we actually dive into the actual step-by-step
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process of shorting a stock in here, it's important to remember that you will need to have margin enabled
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on your account, as well as a minimum of $2,000 in equity in the account. Now, the equity is simply
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the net lick value, so as long as your net lick is above $2,000, you'll be able to short
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Now, if you don't have margin approval yet, all you need to do is come over here to the TD Meritrade
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website, get logged in. Come on up here to Client, services, look underneath the My Profile tab and click on General
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This is the page you're going to come to to apply for all of the privileges you want to add to the account. And for margin trading, you're just going to come over here to the right
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look right here for margin trading, and hit apply for upgrade if you have it right here
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Now that we got that other way, let's go through the actual steps of shorting stock in Thinkerswim
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And I will say it's a lot easier than you might think. The first way we're going to do it is going to be from the trade page
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Up here at the very top, you can see I'm currently looking at Penn National Gaming
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Let's say we wanted to short this stock. All we would have to do is come over here to the bid price, which is the current best price
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somebody's willing to buy it for right now, and all we have to do is click on the bid price
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58-68. From there, an order ticket pops up at the bottom of our screen to sell 10 shares of Penn National
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Gaming at $58.72 a share. Good for the day. There's no special button you need to hit
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You simply need to put in a sell order on a stock you don't currently own. This is going to automatically be a short order
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It is all automatic, but what you're essentially doing is borrowing shares from TDMare Trade
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then immediately selling those shares out in the marketplace. Later down the line, you're going to simply need to buy back those shares to cover the position
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So remember, you sell to open, then you buy back those shares to close. You then get to keep the difference or pay the difference if things went against you
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but that's how you make money on this trade. Hopefully we sell it for a higher price, get to buy it back at a lower price
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Now, right now we are using a limit order, but for this example, I want to make sure we get a fill
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So let's go ahead and short one share of Penn National Gaming just for an example
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And since this is my real account, I don't want to get too crazy with. We'll just do one share here and we're going to put it in at the market price
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We saying we want to short it and we take whatever the current price is All we have to do next is go ahead and hit confirm and send in the little order confirmation box It going to ask are you sure You about to sell one share of Penn National Gaming Remember I don have any shares so this is automatically going to be a short position
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We're going to go ahead and hit send, and I have immediately shorted at one share of Penn National
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gaming. Now, down at the bottom, you can also see I have negative one share of Penn National
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so I am currently short. That's why it says negative one. And if I were to go to the monitor page
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and we come down here to Penn, you can see here it also shows that I'm sure
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short one share. I shorted it at 5866. It's currently 5862. And I'm up currently 7 cents on this trade
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Now remember to close out a short position, all you have to do is put in an order to buy it back
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Now, there's a hundred ways I could do that. But since I'm on this page already, let's just go ahead and
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right click on this order. We're going to say create a closing order. And we're going to say buy back
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one share of pen at the current price 5860. From there, all it does is bring up an order ticket to buy back
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that one share of pen at the current price 58-59. Now again, I just want to do that. I just want to
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to fill immediately so I get out of this position. So we'll go ahead and change this to a market
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order. We're going to go ahead and hit confirm and send. Make sure the order ticket looks right
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I'm about to buy back one share pen at the market price. Everything looks good. We'll go ahead and hit
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send. And there we go. I just bought it back for $58 and 59. And you can see there that I made
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seven cents on that trade. And remember all I did was sell it for a higher price and buy it back for a
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lower price. Now another way to do this is from the charts page and specifically using the active trader
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on the right hand side of your screen. This is the preferred way for a lot of people
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because it's the fastest way to get in and out of a stock on this platform
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Now first I'm going to fix this. I don't know how that got moved over there. And just like before, if I wanted to short some shares of Penn
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all I have to do is put in a sell order on stock that I don't currently own. So right up here, you can see I currently have 10 shares in here in the Active Trader
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We're going to go ahead and change that to one again. Since this is my real account, I don't want to get too crazy with it
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Go ahead and enter here. Now, just like before, if I wanted to put a sell order in
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or short Penn National Gaming, I would just have to hit this sell market button. It's then going to immediately sell one share of pen at the market price
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Another thing I could do is come over here to the Active Trader ladder itself and put in a limit order at a specific price Let say I wanted to put in a limit order to short that stock at 5853 That where I wanted to enter into this short position
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I could simply put my mouse on the right hand side, this little red box here, just the right of
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5853, and just go ahead and click in that box. Since I have Autosin selected up here at the top, that order was instantly submitted, no confirmations
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Now, since it's not getting filled, we'll just go ahead and exit out of that, since I don't want this trade to go through
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So we'll go ahead and exit out of that. but keep in mind I could also use these buy market and sell market buttons up here at the top
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If I were to hit sell market right now, I just instantly sold one share pen at 5834
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And right here in the active trader, you can also see that I currently have negative one share
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so I'm short one share of pen. You can see I shorted it at 5834, and I'm currently down on this specific trade, six cents
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Now remember to close out a short position, all you have to do is buy back that share
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So we're going to come back up here to the top and click on buy market. And there we go
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I just bought back that short position on Penn. Now, the final way we're going to go over how to do this
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and remember, there are hundreds of ways to do it in this platform, is simply on the chart itself
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You could simply come up here to the top, the current price for Penn, and go ahead and click on that price
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From there, you could come down and say, I want to put in a sell order. Just like before, it brings up an order ticket at the bottom of the page
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where you can then tell them, how many shares do you want to short, what price do you want to short it for
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how long do you want that order good for, and then hit confirm and send if you actually want to submit it
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One other way is you could simply right, click on the chart itself wherever you wanted to short it. So right now I right clicked at
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let's do this again. I'm going to right click at 7926 and I'm going to say sell. You can see then
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it brings up an order ticket to sell one share at 7925. It was close to where I right clicked
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And if I actually wanted to submit this, I would just hit send. So you can see there are a lot of
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different ways to short sock and think or swim. So just do it based off personal preference
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whichever way you like to do it. Now there's one other important thing I wanted to talk about and
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that's the difference between easy to borrow and hard to borrow in Thinker Swim. Easy to borrow, which we can see up here at the top right next to Penn, ETB, means we can short
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this stock all day long. There's not going to be any issues with us shorting it. There's also no
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hard to borrow fees so we don need to pay anything extra to short Penn Now if we were to pull up another stock let say AMC currently AMC you can see it now says HTTP or hard up there
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What that means is AMC is very heavily shorted and it's been entered into the hard-to-borrow program
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The hard-to-borrow program just means that this stock has an interest rate attached to it
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If you want a short AMC, you're going to have to pay money too short it. And that's calculated on a daily basis
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So let's say the hard-to-borrow rate for AMC is currently 10%, which is very, very high
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and I don't actually know if that's what it is for AMC. And let's say, for example, you short $100,000 worth of the stock
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Now, since it has a 10% hard-to-borrow rate, if you were to short it and that interest rate were to stay the same the entire year
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you would pay an accumulated $10,000 in interest just a short AMC for an entire year
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So you can see that gets quite expensive. Now, since you're probably not going to be shorting a stock for an entire year
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let's use this on like a daily basis. So we would take that $10,000, divide it by $365
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and in the case of this example on AMC at a 10% hard a bar rate and you're shorting $100,000 worth of it
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it would cost you $27.39 a day to short AMC. Now, that's only a one-time thing
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They're not going to charge you it multiple times if you go short, then buy back, then short again for the day and buy back
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It's only a one-time thing. And it's based off of the largest position that you shorted
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But it's really important to keep that in the back of your mind that I am paying interest to short this particular stock and I need at least that much of a move just to make up for the fact that I've got to pay X amount of interest
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Now, the important thing to remember is not everyone can short hard-to-borrow socks
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You have to be enrolled in the hard-to-borrow program with TD Ameritrade. Now, they used to have rules associated with this
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You had to have like a $100,000 account to be enrolled. They took that away recently so anyone can enroll in the hard-to-borrow program
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All you have to do is call them up on the phone. They're just going to explain the same thing I did that there's an interest rate attached
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to shorting these types of stocks, that that interest rate could change from day to day
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and basically just explain all the rules to you. And then if you're fine with that, they'll go ahead and flip a switch and
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enroll you in the program. But that about wraps things up for today's video. If I miss anything
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or you guys have any additional questions for me, please leave them down below in the comments. If you'd like to tag along, consider subscribing to the channel. Don't forget to hit that
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like button on your way out and I'll catch you all in the next video
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