How to Short on eToro – Step-by-Step Beginners Guide
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eToro
eToro is a leading social trading platform that offers excellent range of assets including stocks, crypto, ETFs and more with copy trading features.
61% of retail CFD accounts lose money when trading CFD’s with this provider.
Quick Answer: These are the steps to shorting on eToro:
Yes, you can short assets on eToro using CFDs. The process is straightforward:
Open and verify your eToro account
Deposit funds in GBP or USD
Search for your chosen asset
Click “Sell” instead of “Buy”
Confirm trade details and place order
Introduction
Shorting allows traders to profit when prices fall. eToro enables this through Contracts for Difference (CFDs), covering stocks, forex, crypto, commodities, and indices. eToro is amongst the best CFD platforms available to UK traders.
It is available to UK retail traders but involves greater risks, overnight fees, and leverage exposure compared to traditional long investing strategies.
How to Short on eToro – Step-by-Step
Step 1 – Open and verify your eToro account
Register online, provide personal details, and complete KYC verification. You’ll need photo ID and proof of address. Verification ensures regulatory compliance and account security. Once approved, you can access the trading dashboard to explore available markets and prepare to place your first short trade.
Step 2 – Deposit funds into your account
Fund your account in GBP, USD, or other supported currencies. Bank transfers, debit cards, and e-wallets are common methods. Remember, all shorts are executed in CFDs, so currency conversion may apply. Check fees for deposits and withdrawals before committing significant capital.
Step 3 – Search for the asset you want to short
Use the platform’s search function to locate the stock, currency pair, crypto, or commodity. For example, type “Tesla” or “BTC/USD” to find markets. Always double-check you are selecting the correct asset before opening a trade, as similar tickers can exist.
Step 4 – Select “Sell” instead of “Buy”
Click the “Sell” option to open a short position. This indicates you expect the asset’s price to fall. The platform calculates exposure automatically, displaying the margin required, leverage applied, and estimated overnight costs before you confirm the trade.
Step 5 – Choose your stake, leverage, and stop-loss
Enter your investment amount and decide if leverage should be applied. Always set stop-loss and take-profit levels to manage risk effectively. Short positions can move against you quickly, so predefined exit points help protect your account from significant unexpected losses.
Step 6 – Place your short order and monitor the trade
Confirm your order to open the short. Monitor performance in your portfolio dashboard, tracking unrealised profit and loss. Adjust stop-losses or close the trade manually when conditions change. Review daily overnight fees, as these can impact profitability for longer-term positions.
Can You Short on eToro?
Yes. You can short on eToro by opening a “Sell” position using CFDs. This allows traders to profit from falling prices across stocks, forex, crypto, and commodities. Shorting is accessible to UK users but carries higher risks, overnight fees, and leverage considerations than standard investing.
Which assets can you short on eToro?
You can short most major asset classes: stocks, crypto, forex, indices, and commodities. Availability varies depending on regulations and market conditions. For instance, high-volatility assets may be restricted temporarily, so always check the platform before placing a short order on your chosen market.
How does shorting work on eToro compared to traditional short selling?
Unlike borrowing shares, eToro uses CFDs, where you speculate directly on price movements. This makes shorting accessible without ownership complexities. However, it also means exposure to spread costs, overnight financing charges, and leverage risks that aren’t present in traditional short-selling arrangements.
Are there restrictions on shorting with eToro?
Yes. Regulatory rules and market volatility can restrict shorting certain assets. For example, some jurisdictions impose bans during extreme conditions. eToro may also limit leverage or availability temporarily. Always confirm trade availability in your account before relying on shorting strategies in volatile markets.
Do you need leverage to short on eToro?
No. Short trades can be opened without leverage by selecting 1x exposure. This reduces risk while still profiting from falling prices. Higher leverage is optional but increases both potential gains and losses, alongside daily financing charges. Beginners should avoid excessive leverage when shorting.
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Costs and Fees for Shorting on eToro
What fees apply to short trades?
Shorting on eToro involves spreads, overnight financing, and potential withdrawal charges. While opening positions may appear commission-free, spreads create costs at entry and exit. Financing fees apply for each day a CFD short remains open, making frequent trading or shorter holding periods more cost-efficient.
Does eToro charge overnight fees on shorts?
Yes. Overnight financing applies to all leveraged CFD positions, including shorts. Charges vary by asset type and leverage applied. Crypto and stock CFDs often carry higher fees than forex pairs. Review the platform’s fee table to understand daily costs before holding short positions overnight.
How does leverage affect costs?
Leverage magnifies both profits and losses, but it also increases daily financing fees. A short at 5x leverage will cost more in overnight charges than one at 1x. Using minimal leverage reduces costs but also limits profit potential. Balance affordability with risk tolerance carefully.
Risks of Shorting on eToro
Why is shorting riskier than buying?
When buying, losses are limited to your investment. With shorting, losses can exceed deposits if prices rise dramatically. This asymmetry makes shorts inherently riskier. Traders must use stop-losses and avoid excessive leverage to prevent rapid account depletion during unexpected market rallies.
What happens if the price rises instead of falls?
If the price increases, your short loses value. Losses grow as the asset rises, and positions may be liquidated if margin requirements aren’t met. Protecting against upside risk is critical—stop-losses and careful trade sizing are essential when shorting volatile or trending markets.
Can you lose more than you deposit when shorting?
Yes, especially with leveraged trades. While some trading platforms offer negative balance protection, large, sudden market moves can trigger outsized losses. Always confirm protections within your account. Managing position size and using risk controls is the best way to avoid losses beyond your capital.
Alternatives to Shorting on eToro
Can you hedge without shorting?
Yes. Investors can reduce risk by diversifying into safer assets like bonds or defensive stocks instead of shorting. Hedging with uncorrelated assets reduces downside without the risks associated with CFDs, overnight fees, or leveraged short positions on volatile instruments.
Are inverse ETFs available on eToro?
Inverse ETFs rise in value when underlying indices fall, offering a way to profit without directly shorting. Some ETFs are available on the platform, though coverage varies by region. They provide simpler downside exposure with lower risk compared to leveraged short CFD trades.
Is reducing exposure safer than short selling?
Yes. Instead of shorting, traders can reduce portfolio exposure by selling part of their positions. This avoids the risks of leverage, overnight financing, and sharp losses if markets move higher. For many beginners, reducing exposure is safer than entering a CFD short.
Final Thoughts
Yes, you can short on eToro using CFDs by selecting “Sell” instead of “Buy.” This gives traders exposure to falling prices across multiple assets. However, shorting is riskier than long investing, with overnight fees and leverage considerations. Beginners should practice cautiously, ideally using demo accounts before committing real funds.
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FAQs
Can beginners short on eToro?
Yes, beginners can short, but caution is vital. Shorting carries higher risk than buying and involves overnight fees. New traders should practice with a demo account before shorting live markets. Education and risk management are essential before attempting advanced strategies like short selling.
Is shorting on eToro the same as using CFDs?
Yes. All shorts on eToro are executed through CFDs, meaning you speculate on price moves without owning the asset. This makes access easier but introduces spreads, financing charges, and leverage risks that differ significantly from traditional shorting methods in stock markets.
What is the minimum amount to short on eToro?
The minimum trade size depends on the asset. For stocks, it is typically around $10–$50, while forex pairs may start even lower. Fractional exposure makes shorting accessible to small accounts, though higher amounts may be required for meaningful position sizing.
Is there a demo mode for practicing shorts on eToro?
Yes. eToro provides a demo account with virtual funds, allowing traders to practice shorting without risk. This is a useful way to learn platform functions, understand overnight fees, and test risk management strategies before trading real money in live markets.
Does eToro allow shorting stocks, crypto, and forex?
Yes. You can short major stocks, cryptocurrencies, forex pairs, commodities, and indices. Access depends on your region and regulatory restrictions. Some high-volatility assets may be temporarily restricted, so always check availability in your trading dashboard before attempting a short position.
References
- https://help.etoro.com/s/article/How-do-I-open-a-short-position?language=en_GB
- https://www.etoro.com/trading/short-selling/
- https://www.fca.org.uk/markets/short-selling/notification-disclosure-net-short-positions
