Help Me Understand Minimizing My Loses w/ Short Selling

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  1. #1
    acuteperformance is offline Senior Member
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    Default Help Me Understand Minimizing My Loses w/ Short Selling

    How would I place this order?

    Stock is at $10. I want to short sell 100 shares but want to automatically buy back what I owe if the price hits $1 that way I only lose $100. I understand that sometimes I won't be able to buy at $11 but it will be around there.

    Is that possible? Am I placing a Stop Order?

    Thanks,

    Michael

  2. #2
    KingNikan is offline Senior Member
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    Yes you are able to place a buy-stop order to protect your investment. Essentially you are setting a stop loss order but you'll set it for a rise in price. As in your example you would set your stop-buy at $11 dollars.

    You can read up a bit more on here for some more details
    Can a stop-loss order be used to protect a short sale transaction?

  3. #3
    acuteperformance is offline Senior Member
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    Okay that's what I thought but I'm trying to process a trade on eTrade and here's what it says, "The stop price must be at least $0.01 below the bid price for sell orders. Please adjust the stop price and resubmit your order."

    Order Type Sell Short
    Qty 50
    Current Price 5.62
    Price Type Stop 6.00
    Good for the Day

    I don't understand.

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  5. #4
    Stance's Avatar
    Stance is offline Senior Member
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    if you short at 10 and cover at 1 then you made 9pts. Maybe I dont understand the question.
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  6. #5
    acuteperformance is offline Senior Member
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    Stance did you see my last post with what eTrade said

  7. #6
    kunal00@bullsonws's Avatar
    kunal00@bullsonws is offline Silver_Sponsor
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    each broker calls the orders something different. For ameritrade with my quotetracker platform y7ou can use a stop market order at 11 and you plug in "buy to cover"

    Quote Originally Posted by acuteperformance View Post
    How would I place this order?

    Stock is at $10. I want to short sell 100 shares but want to automatically buy back what I owe if the price hits $1 that way I only lose $100. I understand that sometimes I won't be able to buy at $11 but it will be around there.

    Is that possible? Am I placing a Stop Order?

    Thanks,

    Michael
    Kunal Desai
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