Does anyone know of a good online broker, preferable direct access, that allows you to short stocks under $5? I currently use Datek and I see so many potential shorts under $5 that I can't trade.
Wrong to the above post. I can and do all the time. There are firms that will allow it, You have to be a professional. You don't want to trade with a broker though, especially Datek. See the thread on Professional Margin 10-1. All of the firms or should I say LLC's in that thread allow shorting stocks under $5.00. You have to be a member of an exchange. The LLC's allow you to trade as a member where the advantages are many. Robert Tharp http://communities.msn.com/rtharpsland
Thanks for the info robert. Why is it that only LLCs gets to short stocks under $5? Thats too bad since I don't have the time to join a group like that. On another note can you give an update on how your trading is going with echotradeonline?
htrader.. i just read your reply about options trading on datek. im fixing to open an account with them to trade options and i have many questions on how this works.since you have experince in this area, i was hoping maybe you would help. Do you have an "instant Message " account with aol where we can converse back and forth about options. i wont take alot of your time. thank you ,john . p.s. please read my post on the "questions fo rTharp" thread i just posted, it will give you an idea of what kind of info. im looking for.
LLC's aren't brokerage accounts. What the structure is is forming a Limited Liability Corporation that owns a membership to a stock exchange. Anyone who belongs to the LLC's becomes a member of that exchange It requires getting a Series 7 license now (stockbrokers license) and capital of usuallly over $25,000. The drawback is our account isn't SPIC insured meaning one trader can blow out my account. Be picky of your firm. I'm trading with an LLC due to the regulations and heavy watching of their traders. By being members we are allowed margin rates known as professional margin of 10-1 instead of the normal 2-1. This means your $25,000 can buy $250,000 worth of stock. A normal broker would only allow $50,000. This is huge leverage. Stocks under $5 can be shorted. Commissions are near nothing.
HTrader I have shorted several stocks under $5 through Interactive Brokers. There are a lot of stocks under $5 that aren't shortable, but I've found plenty that have been.
Thanks for replying mjt. I'm seriously thinking about opening a second account at IB if they do have stocks under $5 to short. Is there any list of stocks available like on their website?