how to set up a short position
in order to place a short order an investor must first have access to this type of order within their brokerage account since margin and interest will be incurred in a short trade this means that you need to have a margin account in order to set up a short position once you have the correct type of account along with any necessary permissions the order details are entered on the order screen just like for any other trade just remember that you are selling first to open a position in hopes of closing the trade by buying the asset back in the future at a lower price in the case of a short position the entry price is the sale price while the exit price is the buy price it is also important to remember that trading on margin does entail interest margin requirements and possibly other brokerage fees example of a short positiona trader thinks that amazon s stock is poised to fall after it reports quarterly results to take advantage of this possibility the trader borrows 1 000 shares of the stock from their stock loan department with the intent to short the stock the trader then goes out and sells short the 1 000 shares for 1 500 in the following weeks the company reports weaker than expected revenue and guides for a weaker than expected forward quarter as a result the stock plunges to 1 300 the trader then buys to cover the short position the trade results in a gain of 200 per share or 200 000 