Had a small short at Ameritrade. I covered using the buy key, not the cover key. And they put both positions in the account. Now thats no big deal , but why do they allow this? at IB , any short is automatically covered with a buy. What benefit is it to have two offsetting trades in the account? If you're doing it to bypass the uptick rule, you are in violation. So why does AMTD permit it? Only obvious reason is it forces you to make two unnecessary trades to unwind.
Did you call and ask them if they would wash the position w/o charging you transaction fees? Just wondering.
Ok. so if the two types have diff settlement dates, how does this benefit the customer in any way? a) I don't think it does b) If there is a benefit, I can't think of one. Maybe on a hard to borrow you could hold on to your short, but once again, you would be playing a 'dangerous' game trading the long in and out. I doubt Ameritrade is so 'friendly' they'd be going out of thier way to allow that.
I would guess it is for "shorting against the box." http://invest-faq.com/articles/trade-short-box.html At the end of the article, it details how you can still short against the box for tax deferral in a very convoluted manner.
IB is the only broker I have used that only use BUY/SELL for stocks. Other brokers I used always have 4 buttoms. BUY/Cover Sell/Short. If you happen to short, and then click buy instead of cover, you will ended up with a long and short position.
No benefits in any case, right. If you have "settled stock" in your account, and you buy the same number shares back, the stock settles 3 days later, that's all I was pointing out. Don
IB, CyberTrader, ViewTrader and some others use just the buy/sell/short buttons with no separate button for cover. I prefer to have a separate button for cover, probably because that is what I am used to using. But there is an advantage. Having a cover button allows you to trade separate positions in the same stock without having a separate account. I have been testing CyberTrader's demo platform and find it cumbersome to have more than 1 position in a stock For example, if I have a trade short that I intend to hold for several hours or days and then try a long scalp and hit the buy button it covers the short position. I've just started the demo version so maybe there is a way around it that I haven't found yet, but it seems much simpler to have a separate button for cover.
I assume that you're aware that a short sale violation will occur even if you have short stock at one broker, and long stock at your current broker....Global Position over all accunts that you can trade....you cannot hit bids...big fines apply... FWIW, Don