LUCID
you owe me forty thousand dollars
So you want to learn how to short sell and make money from stocks falling off
in this video I'm going to show you the four steps to successfully profit from
short selling stocks and i'm talking about the practical steps such as
finding your prime target in real life, trash talk about the stock, how to find
stock to short on your broker then executing a short sale, and collecting
those sweet sweet profits now are you ready to go on this short selling
journey with me today this is going to be an adventure.
But before we go make sure to smash the like button and subscribe so we can all
donate to elon musk's short foundation... all right step one to short selling get
out of your home office and away from your trading computer to the real world
and find companies you hate in real life. Alright, let's go!
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Okay, I know this step might be optional but it's a great way for us degenerates
short sellers to get out of the house into the real world and do some real
life market research. You see this tesla "Model Y" it's bought
from the profit from short selling tesla stock.
This is the rivian office, this is supposed to be worth 100 billion dollars
at once...come on! I've definitely spent a lot of money on
the starbucks drinks but not the stock let's be real here sometimes their
coffee tastes like my grandmother's diarrhea...
To be honest I think i've spent more money on these lululemon pants than I have made
money trading the stock. Check out these sick cars behind me and the nice
t-shirts this is really really nice... oh wait but the glass is dirty this is
why you gotta short the stock
you owe me forty thousand dollars. Okay now that we've selected our targets
in real life. It's time for step number two find shares to short on your broker
all right now it's time to short sell
okay now that we're back at our trading computer it's time to find stocks to
short remember in our last video called short selling for beginners i explained
that to short a stock you must first borrow the shares to short from your
broker essentially you are borrowing something you don't own to sell to
someone else first this is the weird business of short selling and don't
worry let me show you the technical steps now when short selling stocks your
target you'll lose it generally fall under two categories easy
to borrow stocks which is often abbreviated
as etb and hard to borrow stocks htb and the process of finding shares to
short and executing a short sale on these two categories could be quite
different and these stock shares you want to borrow from your broker are
called short locates borrows or shares to borrow they all mean the same thing
let's start with the easy to borrow stocks first if a stock is easy to
borrow it means they are free to borrow from your broker you pay zero dollars to
loan the shares to short a stock so for example i could short tesla starbucks or
even merging stock for free intraday and obviously this is great to see generally
speaking large cap stocks are often free to borrow you can find whether a stock
is easy to borrow or not on your montage window you'll see this s sign besides
your ticker symbol for most of the platforms that means the stock is etb
and you can short sell these stocks for free now moving on to step number three
executing the short sale on your broker platform and let me demonstrate the
short sale on one of my platforms here xero pro by trade zero go to your
montage window select the number of shares you want to short
and then click short to execute the short sale
as demonstration purposes here i shorted 1 000 shares of this stock at 8.42
it's a very similar setup on my other broker platforms as well this is
interactive brokers connected to dash trader pro i often select the stock to
short and then number of shares and then click sell to execute the short sale
okay so the process of step number two finding stocks to should sell and step
number three executing the short seems pretty straightforward for easy to
borrow stocks right now we gotta talk about shorting the
hard to borrow stocks there's a lot more consideration needed when it comes to
shorting these ones that you must be aware of if you watched this video so
far and enjoyed this kind of presentation breaking down the steps of
short selling and locating stocks to short then please remember to hit the
like button and let me know in the comment section below if you want me to
film more fun and educational videos like these in the future okay back too
hard to borrow socks i mean it's in the name after all hard to borrow stocks
that means it's going to cost you extra extra money usually when a stock is not
easy to borrow that means it's more difficult for the brokers to find those
shares to short think about you know pump and dump penny stocks or during the
wall street bets movement when gamestop went all the way to 500
when a stock price is obviously too high and it's very likely to come back down
to earth that's when a stock becomes hard to borrow because the demand to
short a stock is high and often these stocks have lower shares counts so the
supply to shoot them is limited hard to borrow stocks are hard to find and they
cost a lot more money to locate when the stock is htb you won't be able to see
the s symbol on your montage like this stock right here you can see
that it's a lower float small cap penny stock you can see it went to a high of
seven dollars from two dollars just a couple days ago it's very likely going
back down to earth shares float is only about 20 million shares so limited
shares available out there in the market for sure and you would often see this
with other small cap penny stock pump and dump stocks they are generally all
hard to borrow so that means you need to pay in order to locate them to short in
order to get these hard to borrow stocks to short you need to be using brokers
that have an extensive inventory of stocks to short for example trade 0
cobra trading or center point securities let me show you what that looks like on
my platform right now so this is a platform xero pro by trade
zero to locate a hard to borrow stock to short first you need to go to the short
locate window here type in a symbol
and now we need to press enter to look up the cost to borrow these stocks
now if i'm okay with the cost and i want the locate then i just click ok
and there you go you can see that these locates are available in your short
inventory
trade zero is by far one of the best when it comes to hard to borrow stocks
inventory especially if you're having accounts under thirty thousand dollars
and a lot of times they have shares to short on certain extremely hard to
borrow stocks that i really couldn't find anywhere else and they've recently
come back to canada i know in canada there's limited broker options so i'm
very happy to see trade zero back in canada they're also available in the u.s
and other countries as well now let's do the same process at my cobra trading
platform now and see what that looks like you can see to go locate a stock go
to the short locate window type in the symbols you're looking for
and the number of shares and click inquire to see the cost and if you're
okay with the cost then click locate order
and that's it
so all these brokers i just mentioned trade zero cobra and centerpoint they
are the best brokers when it comes to short selling and hopefully this answers
many of the frequently asked questions i get about which brokers to use for short
selling i've account with all of them and i personally use them to short sell
stocks again if you have a small account under thirty thousand dollars or if
you're in canada then trade zero is your best choice when it comes to shorting
hard to borrow stocks i'm working with them to get a deal for you guys to get
one month of 10 off on your locate fees and three months of free platform which
is xero pro the link to sign up is in the description below if you're
interested cobra trading and center point are great for accounts over thirty
thousand dollars however they're not available for canadians you'll still get
some discounts if you sign up through my link down below too i would only
recommend brokers i personally use and these are all great choices the three
short selling brokers they all have a lot of easy to borrow large cap stocks
same as interactive brokers now it's time for step number four
finding cost efficient ways to spend on locate okay so now we learned how to
find stocks short and the best brokers to short now let's talk a little bit
more about the cost of locating stocks well yes paying for locates is part of
the business it's all a business expense that can be used to write off against
your trading profits there's still definitely some smarter ways to decide
whether you want to short a stock or not because when i first got my hands on one
of these short selling brokers i went ham
and located way too much and spends way too much money on locate fees so i want
to offer you some tips when it comes to deciding how much and when to spend
money on locates first tip i have for you is the 1
rule generally speaking a locate cost should not be more than one percent of
the stock price for example a five dollar small cap stock should not cost
more than five cents per share to locate ideally they should cost around one cent
or two cents or if they really cost more than one percent which is more than five
cents then they better be able to give you a lot more range to the downside let
me show you what i mean in just a little bit another example here is the stock
dewac since it's about 40 to 50 dollars this stock should not cost you more than
four to five dollars to short for sure in fact they cost about two cents on
trade zero so that's very very cheap okay so now we know about the one
percent rule but what if the stock actually cost more than one percent to
locate like we mentioned earlier if that's the case then you need to
determine the potential downside for the stock to make sure it's worth it if a
stock is going to cost me one dollar to locate for 1 000 shares that's one
thousand dollars of locate cost then you better be able to give me a one to four
risk reward or even greater meaning that i want to look at a chart
for the stock and see that the short set up on this stock can tank more than four
dollars to a downside to make sure my cost on the locate is worth it so i want
to spend a thousand dollars to potentially make four thousand dollars
remember paying for locate is all business expenses in trading especially
short selling you need to be able to spend money to make even more money
especially on these golden opportunities if you want to learn more about my short
selling strategies or risk management then feel free to check out the humble
trader community in the link below thank you guys so much for watching as always
i'm the humble trader and i'll see you guys next time
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