Webull is the online broker with the second most users among the top trading apps with 2.7 million monthly active users. An instrumental factor in bringing new members comes in the form of an intriguing trading strategy called short-selling or shorting stocks.
But how to short stocks on Webull? There are two different ways to short stocks on Webull. You can either use a margin account or a short-selling account. With a margin account, you can borrow money from Webull to sell shares you don’t own and hope to buy them back at a lower price. With a short-selling account, you simply sell shares you don’t own and wait for the price to go down so that you can buy them back at a lower price and give them back to the original shareholder.
Both of these methods have risks involved, so it’s important to do your research before investing in any stocks. Make sure you understand the company’s financials, as well as the overall market conditions, before making any decisions
I will be lying by saying that two sentences are enough to teach you how to short stocks on Webull.
While practice makes perfect, getting an insight into how the whole trading strategy works and how to utilize various subtleties will give you a priceless advantage.
I am eager to show you how to short stocks and efficiently apply tricks to maximize your winnings. Let’s dive into the vastness of the article already!
How to Short Stocks on Webull?
Once your Webull account has been approved, research the stocks you plan on shorting the right way, and the profit is halfway earned.
Having a detailed knowledge of the unique market preposition will undeniably put you in an optimal position to create an effective plan regarding the short-selling.
You may want to consider paper trading for a few days before you start investing your money.
There are two main types of data you should focus on retrieving.
- Fundamental analysis will provide you with much necessary information regarding the condition of the company and the industry the company in question operates.
- Technical analysis is a specific type of research that attempts to predict the eventual decrease of the stock price based on particular fluctuations.
It is better to start with an industry that you feel close to and are generally familiar with its characteristics.
Once you find a suitable stock, you can move on to the next step.
The next step is setting an order to “short”. The option in question is in the same place where you access the function to buy or sell orders.
Once the order is already set, you have to monitor the price of the stock you are currently shorting. If all goes to plan and you have done your research correctly, the stock value will decrease.
If, for some reason, the stock price unexpectedly goes up, it is advisable to close out to prevent losing a large amount of money. Stock prices tend to be more volatile during after hours trading.
When the stock value has fallen to a level you consider appropriate to close out, enter another order to buy what you owe in stock shares.
The cash that remains in your brokerage account after interest and commission are your winnings for the particular order.
There is always the possibility of the stock price going up and you losing money. If you don’t close out, Webull might issue something known as a “margin call”.
In such instances, the online broker requires you to transfer additional funds from your bank into your account as compensation for the losing difference.
Being unsuccessful in depositing enough money will put your broker in a position to close out for you. There will also be charges for the caused losses.
As you can already tell, shorting stocks may be the easiest way to profit from trading. It is a simple yet efficient strategy to get winnings with no effort apart from researching and timing.
At the same time, the situation at hand may escalate in a negative direction rapidly, leaving us empty-handed or even worse.
A single action may leave us with more losses than we can handle.
How Much Money Do I Need to Short Stocks on Webull?
To take advantage of short-selling on Webull, you need to upgrade your regular cash account to a specific one called a margin account.
There is one more condition that is necessary that would allow you to short stocks. Maintaining an account value of over $2,000 is obligatory to short stocks as required by Webull.
Why Is It Considered Unethical to Short Stocks on Webull?
Three main reasons define the trading strategy of short-selling as unethical and wrong.
First of all, many people condemn the actions of investors trying to get the most out of the failure from companies in distinct industries. The masses that are aware of the nature of short-selling label the behavior of these investors as insensitive and immoral. However, the validity of the argument may be influenced by the unique circumstances of the situation.
A second argument that further solidifies the unethical nature of the trading strategy revolves around changing the status quo on the market. While shorting stocks is not a direct contributor, it may ultimately amplify the stock price or the total opposite – a total collapse.
The final reason is the common practice of exaggerating and spreading misinformation in order to impact the stock price of particular companies. Investors manipulate the way the market operates by strategically voicing an opinion that is far from the truth.
Short-selling is a fascinating yet simple trading strategy that offers the investors a one-of-a-kind opportunity to make money based on tactical betting against the growth of stock prices.
This advanced scheme of work requires an absolute professional that can outweigh the pros and cons of a particular situation based on analysis, analytics, and complex pattern formations. Patience, commitment, and calculated judgment are obligatory qualities an investor must possess to be on top of things. Experience as well, of course.
It is not all roses when it comes to investing and trading. It never is. One wrong step may be the difference between a great win and a great loss. You can monitor the stock price fluctuations all you want. Sometimes the odds are not in your favor, and there is nothing we can do to prevent the risk of losing a substantial sum of money.
The perseverance in the pursuit of mastering trading regardless of the risk and previous losses is the only way to be successful.