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Make money on stocks you think will go down in price.

Shorting (or selling a stock short) is a way to make money on stocks that you think will go down in price.  In a down market shorting can be a powerful tool to make money.  However, the real power of shorting is as a hedge for a portfolio that can preserve capital and reduce risk. That’s why Marketocracy is searching (and paying based on merit) for investors that can prove they have the skill to short.

Shorting is the mirror of investing (or going long) in a stock.  Instead of buying, you sell shares you don’t own in a stock you think will go down in price.  To sell short, you need a margin account to borrow shares from an inventory of stocks that are available for borrowing.  Eventually, you have to buy back the shares to cover what you originally borrowed.  Until now, it has been difficult and expensive to learn how to short and to make enough investment decisions to become a better short investor.
Marketocracy has built the most realistic short selling simulation system available anywhere

Create up to 15 margin accounts (or funds) for short selling stocks
Start with $1 million of virtual cash in each account
Borrow shares (virtually) from an inventory made available to borrow by brokers to hedge funds and institutions
Trades are matched against real-time data feeds from exchanges
Realistic virtual commissions and fees
Dividends and corporate actions are applied
Marketocracy is assembling a team of the best short portfolio managers in the world.
start today (it’s FREE):
 

START trading your own short-only margin account with $1 million of virtual cash.  It’s FREE!

Already a Marketocracy member?  Login above and choose 'create a new fund'
Not yet a member? Click here to join for FREE

LEARN how difficult it is to short against the market without risking your own money.  And get better.  Find out how good you are at shorting and use our professional portfolio management tools to discover what strategies work and which ones don’t. 

COMPETE to join our team of the best short portfolio managers in the world.  We rank and pay for performance.

 
   
ARTICLES ON SHORTING

"Short Call: How to Profit From Shorts" - CBSMarketwatch by Kevin Kennedy

"Short Selling" - TheStreet.com by Stephen Schurr

"How to Make Money Shorting Stocks in Up & Down Markets" - Pristine.com by Oliver Velez

"The Short Report" - TheStreet.com by James Cramer

"The Art of Safe and Profitable Shorts" - TheStreet.com by Gary Smith

"Short Squeezes Have No Appeal" - TheStreet.com by James Cramer

"Rules for Shorting Stock Staying in Place" - Forbes.com by Tara Murphy

"Knowing the Rules of the Shorting Game" - TheStreet.com by James Cramer

"Short Stuff" - TheStreet.com by Gary Smith

"Buying on Margin" – MSMoney.com by Kimberley Clouse

"Short Sellers Thrive in Bear Market" - Investor's View Magazine by WallStreetWindow.com
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WEBSITES ON SHORTING

Shorting Stocks Online: Site dedicated to teaching stock traders the power and profitability of short selling in bear and bull stock market sessions

Shortpicks.com: A comprehensive and impartial resource for investors and traders interested in overpriced stocks

Against the Crowd: Short selling newsletter service
 
 OTHER LINKS ON SHORTING

The Fool FAQ: Shorting Stocks - Motley Fool

Information About Short Sales – U.S. Securities and Exchange Commission

Short Selling: What Does It Mean? – Investopedia.com

Trader’s Talk Newsletter – kciFINANCE.com

Shorting Stocks Explained – Day Trading World

Fools Feature: Stocks to Short – Motley Fool

Strategies for Shorting Stocks – Rookie Day Trader

Short Selling Resource Center – DayTraders.com

Traders Corner – Traders Nation

Trading Talk – RealWorld Trading

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BOOKS ON SHORTING

Trend Following: How Great Traders Make Millions in Up and Down Markets by Michael W. Covel

The Streetsmart Guide to Short Selling: Techniques the Pros Use to Profit in Any Market and What Is Short Selling? by Tom Taulli

Short Selling: Strategies, Risks and Rewards by Frank J. Fabozzi

Bull's Eye Investing: Targeting Real Returns in a Smoke and Mirrors Market by John Mauldin

The Art of Short Selling and When Stocks Crash Nicely: The Fine Art of Short Selling by Kathryn F. Staley

How to Make Money Selling Stocks Short by William J. O'Neil & Gil Morales

Selling Short: Risks, Rewards, and Strategies for Short Selling Stocks, Options, and Futures by Joseph A. Walker

Tools of the Bear: How Any Investor Can Make Money When Stocks go Down by Charles J. Caes

Financial Shenanigans: How to Detect Accounting Gimmicks and Fraud by Howard M. Shilit

Absolute Returns: The Risk and Opportunities of Hedge Fund Investing by Alexander Ineichen

The Beginner's Guide to Short Selling with Toni Turner (VHS tape) by Toni Turner

Effective Short Selling (VHS tape) by Michael Smith
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FREQUENTLY ASKED QUESTIONS ON SHORTING
What is shorting?
Selling stocks you don't own with the hopes that you'll be able to buy it back later at a lower price. To sell a stock short you have to first borrow the stock and eventually, you'll have to return it.
What do I need to do to start shorting?
To short stocks you need a margin account so that you can borrow stocks to sell and you need collateral. When you start a short-only fund at Marketocracy you get a margin account with $1 Million of virtual cash to use as collateral.
How do I get started?
If you’re already a Marketocracy member, just login. Then select, “create new fund” from the “my funds” menu and check the “short-only” button.  That’s all.   You can begin shorting. If you’re not a member, then join (it’s free) and get started.
How many short funds can I create?
At Marketocracy you can create and manage up to 15 funds (short or long) concurrently. Each starts with $1Million of virtual cash
Borrowing Stocks to Sell Short
Not all stocks are available for borrowing to sell short. To make shorting at Marketocracy as realistic as possible, when you enter a short sell order, Marketocracy automatically checks against an industry "stock borrow" list (updated daily) to determine whether or not your order to borrow and sell short could realistically have taken place. On the Stock Info page we show the total number of shares available for shorting under "short volume."
Shorting Stocks

When you’re ready to short a stock, Marketocracy has a “Short Wizard” that makes it easier to enter multiple orders.
Do you follow the "uptick rule?"
Yes.  To make Marketocracy's shorting more realistic, we impose Rule 10a-1 under the Securities Exchange Act of 1934, commonly referred to as the "tick test." Essentially, we will wait to execute your short sell order until the stock trades up a tick.
Buying Back Shares to Cover Your Short
When you're ready to buy back the stock you shorted and return it, Marketocracy has a "Buy-to-Cover (BTC) Wizard" that makes it easier to enter multiple orders.
Dividends and Corporate Actions for Shorts
When a stock has corporate actions, e.g., issues dividends, stock splits, mergers, acquisitions, spinoffs, etc. that affect a stock, the investor that borrowed and sold that stock short must make the person or firm that loaned the stock whole. That could mean paying a cash dividend or delivering shares to the lender. Marketocracy tracks this accurately and realistically.
Maintaining a Margin Account
Marketocracy monitors margin requirements for your account and sends you notices when you have to make trades to meet margin calls.
More FAQs
For answers to more questions on shorting click here
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Our goal is to establish Shorting Central as an extremely useful information center for short sellers. We welcome your input. If you have any comments, suggestions, additions, or corrections to anything on Shorting Central, please send an email to shortingcentral@marketocracy.com.