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How to short on Plus 500

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Quick Answer: Can you Short on Plus 500?

Yes, you can short sell on Plus500, through the medium of CFD trading, and it’s straightforward to do. Short selling on Plus500 involves selecting an asset you anticipate will decrease in value, opening a ‘Sell’ position through the platform, and then buying back the asset at a lower price to profit from the difference. To short on Plus500, follow these steps:

Abstract illustration of the short selling process on a digital trading platform, featuring stylized interface with downward arrows on stock charts, graphs, and numerical data, in a modern, sleek design with a green and white color scheme.

Step-by-Step Guide

  1. Open a Trading Account: Log into your Plus500 account or create a trading account if you haven’t already.

  2. Locate Trade: Search for the asset you wish to short in the platform’s trading interface.

  3. Execute Trade: Click on the ‘Sell’ option to open a short position on the asset.

  4. Determine Exposure: Specify the size of your position and set any desired leverage.

  5. Utilise Trading Tools: Use risk management tools provided by Plus 500, like stop-loss orders, to protect your investment.

  6. Make Informed Decision: Monitor the market and close your position when you believe it’s most profitable or to cut losses.

CFD Broker Comparison
5/5
82% of retail CFD accounts lose money
4.5/5
71% of retail CFD accounts lose money
4/5
69% of retail CFD accounts lose money
4/5
74-89% of retail CFD accounts lose money
4/5
81% of retail CFD accounts lose money
Fee Score
3.9
3.8
3.5
4.1
3.8
Platform Score
4.9
4.8
4.9
3.5
4.6
Account Opening Score
5
5
4.5
3.5
4.6
EURUSD Spread
0.8
0.9
0.6
0.1
1
Withdrawl/ Deposit Fee
No
No
No
No
No
Minimum Deposit
$100
$100
$0
$0
$1
MT4 Available
No
Yes
Yes
Yes
No
FCA Regulated
Yes
No (CBI In Ireland)
Yes
Yes
Yes
FSCS Protection of £85K to UK Clients
Yes
No
Yes
Yes
Yes

81% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

We consider Plus500 to be our favourite CFD Trading Platforms. Beginners could practice trading with Plus500’s free demo account. Join Plus500 today and enjoy the benefits of their powerful trading platform and exceptional customer service.

Introduction To Short Selling

The realm of financial trading is vast and complex, offering a myriad of strategies for investors looking to capitalise on the ever-fluctuating market. Among these strategies, shorting stocks occupies a unique niche, known for its potential to generate profit in a declining market. This blog is crafted to shed light on the intricacies of creating a short position, specifically focusing on its execution within the Plus500 platform—a platform celebrated for its user-friendly interface and comprehensive trading tools. As we navigate through the nuances of shorting, from its conceptual framework to practical application on Plus500, our goal is to equip you with the knowledge and skills to leverage this strategy effectively. Whether you’re a seasoned trader or new to the financial markets, understanding how to open short positions on Plus500 could significantly enhance your trading repertoire.

What is Short Selling?

Graph trending downwards

At its core, short selling is an investment strategy that stands in contrast to the traditional buy-low-and-sell-high philosophy. It allows traders to profit from the depreciation of a security’s price—a concept that might seem counterintuitive at first glance. The process begins with the trader borrowing shares that they do not own, immediately selling those shares at the current market price. The ultimate goal is to buy back the same number of shares at a lower price in the future, returning them to the lender. The profit, therefore, is the difference between the price at which the shares were sold and the lower price at which they were bought back, minus any fees or interest charged for the borrowed shares.

This strategy is facilitated by the use of leverage and margin trading, tools that allow traders to open positions larger than their own capital would ordinarily permit. However, these tools also amplify the potential losses, making short selling a double-edged sword. Understanding the mechanics of short selling, including the roles of leverage, margin, and the necessity of covering (buying back the borrowed shares), is crucial for any trader considering this strategy.

Why People Short Sell? 

The motivations behind shorting stocks are as varied as the traders who utilize the strategy. Some view it as a direct way to speculate on the anticipated decline of a security’s price. If a trader believes that a company’s stock is overvalued or that upcoming news will negatively affect its price, shorting offers a way to monetize this belief. Others employ shorting as a hedging mechanism, protecting their portfolios against potential downturns. By shorting securities that are expected to lose value, traders can offset losses in other parts of their portfolio, thereby reducing overall risk. 

Shorting also adds a layer of diversification to investment strategies. Since it profits from market declines, it behaves differently from traditional investments that rely on market appreciation. This can be particularly appealing in volatile or bearish markets, where opportunities for gains through traditional long positions may be limited. Moreover, shorting stocks provides liquidity to the markets, which is beneficial for overall market efficiency.

Yet, despite its potential benefits, shorting is not without its risks. The theoretical potential for loss is unlimited, as the price of a security can rise indefinitely. This aspect of shorting stocks underscores the importance of careful strategy and risk management, themes we will explore in greater detail as we delve into shorting on Plus 500. 

Short selling graph with an arrow pointing upwards

How to Short Sell on Plus500?

Short selling the stock market on Plus500 is facilitated through a user-friendly process, designed to make the execution of short positions straightforward for traders at all levels of experience. Here’s a detailed walkthrough. 

  1. Account Setup

    The first step is creating a Plus500 account, which is a simple process. After providing the necessary details and verifying your account, you’ll need to deposit funds to start trading. Plus 500 offers a demo account as well, allowing traders to practice shorting stocks and shares without any financial risk.

  2. Selecting Assets

    Plus500 provides a wide array of assets that can be shorted, including stocks, indices, forex, commodities, and cryptocurrencies. Traders can use the search function or browse through the categories to find the desired asset. Each asset comes with detailed information, including leverage options and spreads, to aid in decision-making.

  3. Placing an Order

    Once you’ve selected an asset to short sell, click on the ‘Sell’ button to open a short position. You’ll then specify the size of your position and decide if you want to apply leverage. Leverage can amplify your potential profits but also increases the risk, so it should be used judiciously.

  4. Risk Management

    Plus500 offers tools for setting stop-loss orders, which automatically close your position at a certain price to limit potential losses. Traders can also set price alerts to be notified of market movements. These tools are essential for managing the risks associated with shorting.

  5. Monitoring and Closing

    After placing your short order, monitoring the market is crucial. The Plus500 platform provides real-time updates and charts to help you make informed decisions. When you decide the time is right, either because you’ve reached your desired profit level or you want to cut your losses, closing the position is just a matter of executing a buy order for the same asset.

Once your CFD account is set up and funded, you can proceed to short stocks using the steps outlined in the ‘Short Answer’ section above.

By understanding the basics of short selling, the advantages of using Plus 500, and the steps to set up a CFD account, you’re well on your way to becoming a more informed and potentially successful trader. Remember, however, that short selling carries high risks and should be undertaken cautiously and responsibly.

Why Plus500 is the Best in the Market for Short Selling?

Plus500 distinguishes itself as a leading platform for shorting for several reasons 

User-Friendly Interface

The platform is designed with the user in mind, making navigation and operation intuitive. This ease of use is crucial for timely decision-making in shorting stocks, where market conditions can change rapidly.

Wide Range of Tradable Assets

Plus500 offers an extensive selection of assets for shorting, providing traders with the flexibility to operate in various markets and sectors. This diversity allows traders to take advantage of different market conditions and hedge their portfolios effectively.

Competitive Spreads and No Commissions

The platform operates with tight spreads, which are among the lowest in the industry, and does not charge commissions on trades. This cost efficiency is particularly beneficial for shorting via trading CFDs, where profit margins can be tight. 

Advanced Risk Management Tools

Plus500 provides sophisticated tools for managing risks, including stop-loss orders and price alerts. These tools are indispensable for short sellers, who need to mitigate the potentially unlimited losses associated with their trades.

Regulation and Security

Plus500 is regulated by several international financial authorities, ensuring a high level of security and fairness for its users. This regulatory oversight gives traders peace of mind, knowing their investments are protected to the extent possible in the volatile world of short selling.

Tips and Tricks to Be Profitable Whilst Short Selling

Speech bubble with Quick Tips and a light bulb

In the realm of short selling on the stock market, profitability hinges on strategy, timing, and risk management. Here are some tips for traders looking to make profitable short sells on Plus500: 

Conduct thorough research and stay informed about market trends and news that could affect the price of the asset you’re shorting.

Use technical analysis and indicators to identify potential entry and exit points for your short positions.

Start with smaller positions to manage risk effectively, especially if you’re new to short selling by trading CFDs.

Always set a stop-loss order to limit potential losses, and consider setting take-profit orders to lock in gains automatically.

Practice with a demo account to hone your shorting strategy without risking real money.

By following these guidelines and leveraging the features and tools offered by Plus500, traders can navigate the complexities of short selling and trade CFDs with greater confidence and potential for success.

Conclusion

Successfully navigating the stock market with shorting on Plus500 hinges on understanding key concepts such as share price movements, maintaining the required margin, and managing financing costs. When traders open a position to short sell, they speculate on the decline of share prices, aiming to profit from buying back the asset at a lower price. This strategy requires careful consideration of the maintenance margin to keep the short position open, as well as the financing costs that accrue over time.

Plus500 facilitates traders with illustrative prices and flexible trading hours, enabling them to make informed decisions on when to buy or sell. Opening a position, whether to initiate a short sale or close one, demands awareness of the platform’s required margin and the potential for an absolute limit on losses, which can be mitigated by options like a guaranteed stop.

Keeping an open position beyond trading hours may influence the financing costs, emphasizing the importance of strategic planning around the timing of trades. Plus500’s platform provides tools to help manage these aspects, including features that allow traders to set a guaranteed stop to protect against market volatility.

In essence, mastering short selling via trading CFDs on Plus500 involves a blend of strategic decision-making regarding when to open and close positions, understanding the dynamics of share price movements, and effectively managing the financial obligations such as maintenance margin and financing costs. With these considerations in mind, traders can leverage their short positions to navigate the financial markets more effectively.

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81% of retail CFD accounts lose money.

FAQs

Short selling on Plus500 is a trading strategy that allows traders to profit from a decline in a financial instrument’s price. When you short sell, you borrow a financial instrument, such as a stock or commodity, and sell it at the current market price. Later, you aim to buy back the instrument at a lower price, return the borrowed shares, and keep the difference as profit. Plus500’s platform facilitates short selling by offering CFDs (Contracts for Difference), enabling traders to speculate on price movements without owning the underlying asset.

To start short selling on Plus500, you first need to create and verify your trading account. Once set up, log in to the platform, search for the instrument you want to short sell, and open a new position. Select the “Sell” option to initiate a short sell order. Decide on the amount you wish to trade, set any stops or limits to manage your risk, and then confirm your trade. It’s important to monitor your position closely and understand the risks involved in short selling.

Short selling involves significant risks. The main risk is that the price of the financial instrument can rise instead of falling, leading to potentially unlimited losses, as there’s no upper limit to how high a stock price can go. Other risks include interest costs on borrowed shares, the possibility of a short squeeze (where prices are driven higher by other short sellers covering their positions), and platform-specific risks such as slippage and margin calls. It’s crucial to have a risk management strategy in place, including using stop-loss orders to limit potential losses.

Plus500 offers a wide range of assets for short selling, including stocks, forex, commodities, indices, ETFs, and cryptocurrencies. However, not all assets may be available for short selling at all times due to market conditions, liquidity, or regulatory restrictions. It’s advisable to check the availability of the specific asset you’re interested in short selling directly on the Plus500 platform.

Yes, there are fees associated with short selling on Plus500, which can vary depending on the asset being traded and the market conditions. Common fees include spreads (the difference between the buy and sell prices), overnight funding charges (if you hold your position open overnight), and, in some cases, commission fees. The specific fee structure can be found on the Plus500 website or within the details of each instrument on the trading platform. It’s important to factor in these costs when planning your trading strategy.

I'm Dom Farnell, a retail investor with a keen interest in the financial markets. My journey in investing has led me to share my experiences through blogs and articles, aiming to provide insights that might help others navigate their own investment paths. While not a professional advisor, my goal is to offer a perspective grounded in real-world experience, exploring strategies, challenges, and opportunities in investing. My passion lies in deciphering the complexities of the market and turning them into actionable knowledge for fellow investors.

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