Best Brokers for Short Selling in 2024 • Benzinga (2024)

Benzinga readers often chooseCenterPoint SecuritiesorTradeZeroas the best brokers for short selling.

Day traders who speculate on an upcoming decline often sell stocks short. But you can also use short sales to balance portfolio allocations and manage risk. That's one reason why you need the best brokers for short selling.

When you sell stocks short, you borrow the stock from your stockbroker, then sell the borrowed stock in the market and leave an open short position. You close that short position by repurchasing the previously sold stock, hopefully for a profit.

As a short seller, you profit by buying back the sold shares at a lower price and making the difference between the sale price and the purchase price on each share. If the stock goes up, you wind up paying a higher price for the short stock and take a loss. Selling short also has some important rules.

Not all brokers are created equal, so carefully consider your needs before you open an account and startinvesting. Get started now with our recommended brokers for shorting a stock.

Here's a list of Benzinga's preferred brokers for short selling. You should use a brokerage that's best for you, not one that everyone says you will love.

• Best for Active and Global Traders:Interactive Brokers
• Best for Day Traders:CenterPoint Securities
• Best for Cost-conscious Traders:moomoo
• Best for Day Traders and Scalpers: Guardian Trading
• Best Overall Brokerage for Short Selling:TradeZero
• Best for Short Selling Over $25k:Cobra Trading
• Best for Intermediate Traders:TradeStation
• Best for Active Traders:Webull

1. Best for Active and Global Traders: Interactive Brokers

Interactive Brokers is the premier broker among active traders who are looking to sell short. Their platform features the IBKR Securities Loan Borrow (SLB) system, which provides short sellers with vital information about the availability of shortable securities such as the quantity available, number of lenders, and both current and historical indicative borrow rates. Advanced traders can even upload a bulk request text file to search for the availability of multiple shortable securities at once and download prepared lists of shortable securities grouped by country.

2. Best for Day Traders: CenterPoint Securities

CenterPoint Securitiesis a brokerage firm that offers remarkable tools for intermediate to advanced traders, high-volume traders, momentum traders and short sellers. When you short sell with CenterPoint, you can take advantage of a massive short inventory and advanced order routing so that your orders process as quickly as possible.

There are discounts available to active traders, and the customer support team is very responsive. Try a Pro, Web or Mobile account, use the built-in scanners, custom alerts and short locates tools so that you can make wise decisions and stay on top of your portfolio.

3. Best for Cost-Conscious Traders: Moomoo

Moomoo is an intuitive investment and trading platform with pro-grade, easy-to-use tools, data, and insights, with a pro-level experience for investors of all levels.

When you sign up with Moomoo and open an account, you can access unique features, including:

• Real-time Level 2 stock and options market data for funded accounts
• Advanced technical indicators and charting tools
• Advanced order types
• Full extended trading hours from 4 AM to 8 PM EST
• Multi-market quotes
• Low fees, including $0 commission on U.S. Stocks or ETFs and $0 equity options contract fees
• 5.1% APY in the Cash sweep program

New from moomoo!

• New User Deposit Bonus: Deposit $100 and receive 7 fractional shares of a star-stocked bundle ("Magnificent 7" at $5 each)
• New User Transfer Bonus: Get a 1.5% cashback on your initial transfer amount (up to $300)
• Referral Bonus: Invite a new user who deposits $100 or transfers in $1,000, and receive 7 fractional shares of a star-stocked bundle ("Magnificent 7" at $5 each)

You can reach out to the Moomoo customer support team either by phone during the trading day or via email. Users are also welcome to review FAQs in the Help Center for more information.

The site also helps users learn more about trading through an expansive educational resource offering, provides many pro-level research tools, and features an active global community with 20M+ users worldwide.

4. Best for Day Traders and Scalpers: Guardian Trading

Guardian Trading offers speedy execution, cost efficiency and a quality environment for active or experienced investors. The real-time access on the site comes with short locates and overnight borrows. With sponsored access, you’re using Guardian to choose the venue where you wish to buy, sell or execute trades. Offering flexibility, seamless trading, short-selling, overnight borrowing and more, you can use their suite of tools to build a strong portfolio.

Other tools include the stock locate system, cutting-edge clearing, quick execution and competitive securities lending programs that work well for day traders, scalpers, momentum traders and more.

5. Best Overall Brokerage for Short Selling: TradeZero

TradeZerowon the Benzinga Global Fintech Award for Best Brokerage for Short Selling in 2020, 2021 & 2022. TradeZero offers free limit orders and marketable orders, including market orders and marketable limit orders, which only cost $.005 per share.

TradeZero also offers 6:1 intraday leverage on equity. 6:1 day trading leverage allows traders to maximize day trading opportunities in the market. You can get 2:1 leverage on overnight positions.

6. Best for Short Selling Over $25k: Cobra Trading

Cobra Tradingis the go-to broker for short selling with its exceptional access to borrows and direct access routing. Cobra gives you the ability to take advantage of the best opportunities in the market. The broker has been in business for nearly 20 years and maintains the perks of a small firm.

Cobra Trading exclusively opens and services active trading brokerage accounts above $25K. Cobra allows you to trade in a way that a "free broker" cannot.

7. Best for Intermediate Traders: TradeStation

TradeStation'splatform used to only be best for professional traders who needed a highly technical platform. Now, with TradeStation's new TS GO account option, you'll have access to professional-grade stock screeners and extensive educational and development tools to help them develop as investors.

8. Best for Active Traders: Webull

Webull is a mobile app-based brokerage that features commission-free stock and exchange-traded fund (ETF) trading. It's regulated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).

Short Selling and its Importance in Day Trading

Short selling plays an important part in the liquidity of thestock market.If a stock becomes overvalued according to the market, then short sellers borrow shares to sell the stock down, thereby aligning stock prices to their fair value.

The practice of short selling combines the opinions of both bulls and bears to arrive at an equitable price for stock. Short selling provides other benefits to the market including greater liquidity, which increases the opportunities for short-term traders like scalpers and day traders.

Remember, the share price that you hone in on is not stable. You're likely not operating as a market maker and you're not running a hedge fund. However, you know that there's a specific market price at which you're willing to short.

More liquidity also leads to tighter bid/offer spreads that reduce overall costs to active day traders. In addition, shorting stocks increases capital formation and lowers the likelihood of bubbles and crashes due to the increased efficiency and more accurate pricing in the market.

With respect to large investors, fund managers allocate funds efficiently and hedge against long-term investment strategies. In combination with futures and options, shorting stock could be integrated into numerous highly profitable day trading strategies, including arbitrage and momentum trading.

What to Look for in the Best Brokers for Short Selling

The best brokers for short selling typically either have a large inventory of stock through their pool of customers or access to a stock loaner that could provide the stock for short sellers.

Here are a few more things to look into:

• Most large stockbrokers can obtain considerable amounts of stock through their big institutional clients and have whole departments dedicated to facilitating stock loans.
• Smaller and less capitalized brokers may not be able to provide every stock to short and therefore may put restrictions on short sales.
• If you have limited assets, also consider the broker's margin account. You need a margin account in order to borrow shares from a broker. Stockholders and traders generally allow the broker to borrow their stocks and other holdings as collateral for existing margin debt balances, and that is one of the main ways brokers borrow stock. For example, Charles Schwab can borrow stock worth as much as 140% of the debit balance amount from a client's margin account but can't borrow securities that are settled and paid in full.
• An interface you understand makes the investment journey that much simpler. If you're spending your money in a place that confuses you, it's only a matter of time before you make a mistake or miscalculate your investment.

Start Short Selling Today

Learn the unique rules of short selling and find a trusted broker to help you navigate the market. Our recommended brokers can help you sell short and offer educational support. From eTrade short selling to Moomoo, Interactive, Schwab and more, you can test the market, learn how to short sell and diversify your portfolio.

Reap the benefits of liquidity and start short selling today. You can look through the brokerage firms that Benzinga likes, watch as the price declines on a stock you might be able to short and diversify your portfolio with help from shorting. Remember, there are other types of investments that you can also initiate at the same time.

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