Complete Guide: Short Selling on Vanguard – Step-by-Step Walkthrough

by | Aug 2, 2023 | Vanguard IRA | 17 comments

Complete Guide: Short Selling on Vanguard – Step-by-Step Walkthrough




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How to Short Sell on Vanguard – Full Example

Short selling is an investment strategy that involves selling a security that you do not actually own, with the anticipation that its price will decline. While this strategy can be risky, it allows investors to potentially profit from a declining market or specific stock. If you are a Vanguard investor and want to learn how to engage in short selling on their platform, this article will guide you through the process with a full example.

1. Understand the Risks:
Short selling exposes investors to higher risks than traditional long positions. If the price of the security you short sell rises instead of falling, you can incur substantial losses. It is crucial to thoroughly analyze and understand the risks involved before proceeding.

2. Open a Vanguard Account:
If you are not already a Vanguard client, start by opening an account with them. Visit the Vanguard website and follow the registration process to create your account. You will need to provide personal and financial information, including identification and bank details.

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3. Access Your Account:
Once you have opened your Vanguard account, log in using your username and password. You will then be able to access your account dashboard.

4. Research Stocks:
Before initiating a short sell, conduct thorough research on the stocks you are interested in. Look for stocks with high short interest ratios and indications of potential price declines. Utilize various financial news sources, technical analysis, and fundamental research to make informed decisions.

5. Check Availability:
Not all stocks are available for short selling on Vanguard, so it is essential to check if the stock you want to short sell is included. Vanguard provides a list of available stocks for short selling on their website. Alternatively, you can contact their customer support for further assistance.

6. Place a Sell Order:
Once you have identified the stock you want to short sell and ensured it is available on Vanguard, it is time to place a sell order. On the Vanguard platform, navigate to the “Trade” or “Buy & Sell” section. Input the stock symbol of the security you wish to short sell.

7. Select Sell Short:
On Vanguard, you will have various options for selling, including “Buy,” “Sell,” and “Sell Short.” Choose the “Sell Short” option to proceed with the short sell.

8. Enter Quantity and Price:
After selecting “Sell Short,” you will be prompted to enter the quantity you want to short sell and the price limit. Set the number of shares you wish to sell, keeping in mind that you do not physically own these shares. Determine the price at which you want to initiate the short sell, considering the current market conditions and your desired profit margin.

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9. Review and Confirm:
Once you have entered the necessary details, review your order and ensure everything is accurate. Look out for any fees or commissions associated with short selling. When you are satisfied, click “Confirm” to submit your order.

10. Monitor and Manage Your Position:
After successfully executing a short sell, actively monitor your position and the market conditions. Set stop-loss orders to limit potential losses and implement appropriate risk management strategies. Consider closing your short position when your desired profit level is reached or if the market starts to move against your intended direction.

It is worth mentioning that the availability of short selling on Vanguard may be subject to account type, investor qualifications, and regulations. Consult Vanguard’s website or contact their customer support for up-to-date information and further assistance.

Short selling can be a complex and challenging strategy, requiring adequate knowledge and experience. It is recommended to seek guidance from financial professionals or engage in a thorough educational process before engaging in short selling activities.

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17 Comments

  1. Memory Rinehart

    You're charged interest even if you short no more than what's in your cash account?

  2. Mike Affholder

    its mid 2023 vanguard still laggy lol and old

  3. William M

    What is most important to remember is that the proceeds from a short sale should remain in the Settlement fund. If one withdraws the proceeds to to buy anything, even a different money market fund, Vanguard immediately begins to charge margin interest at the high rate you demonstrated.

    Agree it would be helpful to discuss margin interest. Probably should disacuss "stops" too.

  4. Cullieman

    @Jake Broe Great video! Quick question – is there a time limit to when I have to buy the stock back after I short it? Or, can I choose to buy it back at any time?

  5. Hannibal Lector MD

    This was very well explained thank you for the info I never understood exactly how people were profiting off barrowing shares when a stock was going down makes sense now

  6. Mari Dem

    Excellent explanation of this! Thank you.

  7. Danny Creech

    How do you know which stocks you can short and is there a limit to how much $$/shares you can short?

  8. AHillard1

    learning this for this second gme pop lol

  9. TheBinskWay

    Can I short sell in a IRA??

  10. MotorsportsX

    please explain how/when they calculate the interest in detail.

  11. creamyvagana

    I bought amc stocks and I orginally put 500 into my accounts, I bought 10 shares for 137 or something. and It says as of right now my money i can buy more stocks with is about 363, so perfect. Although Im worried since I have made 17 dollars profit, will I get all my 500 back plus my 17 bucks I made or how does that work.

  12. Jacobs Trouble

    hey Jake great video! I'm relatively new to trading, and I use Vanguard for trading, but their options aren't like any others I've seen on Youtube videos. Can you possibly make a tutorial on buying/selling calls and puts on Vanguard?

  13. Marcus Fry

    Can short selling only be done on margin and paying them interest?

  14. Investing Technology

    Thanks for this! I’ve only been investing since late 2019 and I’ve been too cautious to try this during the March/April crash. I might have to experiment a bit with this in the coming weeks/months.

  15. Alvin S

    The Boglehead in me can't watch this video. The YouTube viewer in me still pressed 'play'

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