Short Selling

Clever traders know it’s possible to profit from a falling share price.

With Sequoia Direct and a covered short selling facility through Leveraged you can make profitable trades even in a bear market.

Apply now to start short selling or call us on 1300 130 545 to speak to our friendly team.

Risks of Short Selling

  • Because the price of a security you have short sold can increase by an unlimited amount, your potential losses are also unlimited.
  • Your lender may ask you to make a payment, provide additional collateral or close out your short sale transaction before your planned timeframe.
  • Because a short sell facility is a feature of a margin loan, it also carries with it the same risks as you would find with a margin loan.

Please ensure you read and understand the Leveraged Short Plus Product Guide before proceeding with a short selling strategy.

Short Selling in Action

Whilst orders are placed directly into the ASX’s Integrated Trading System (ITS) you can amend or cancel an open order at anytime

  • Imagine you would like to short sell $100,000 worth of BHP
    Leveraged Equities requires a safety margin of 15% for this security:
    Safety Margin = 15% of consideration ($100,000)
    Safety Margin = $15,000
    Your safety margin will be taken from your cash account.
  • Open your short sell position
    Sell 2000 BHP shares at $50 per share
  • BHP shares drop to $49
    As the value of your stock decreases, the dollar value of the 15% safety margin is also reduced, and you are left with more available cash.
  • BHP shares drop to $48: time to close your position
    You close your short position by buying 2000 x BHP at $48 = $96,000
  • Your available cash: $20,000
  • Your stock: -2000 BHP shares @ $50 per share
    Your profit: $0
    Your available cash: $5,000
  • Your stock: -2000 BHP shares @ $49 per share
    Your profit: $2000
    Your available cash: $5,300
  • Your stock: -
    Your profit: $4000
    Your available cash: $24,000

Note: the profit figure in this example does not include fees or interest charges. For more examples of short selling in action, read the Leveraged Short Plus Product Guide.

How to Apply

Opening a short selling account is easy: just complete our application. Note: your short selling transactions must be made through an account separate to your regular trading accounts.

How to Place a Short Sell Order

Once you have your short selling accounts set up, there are a few simple steps for placing your trade:

  1. Ensure the security you wish to short sell is on the Leveraged Approved Short Plus list.
  2. Request authorisation for the trade directly from Leveraged.
    Phone: 1300 307 807 Email: Your authorisation is valid for one day only, and you will be provided with an authorisation code.
  3. Call the Sequoia Direct trading desk to place your short sell order, quoting your authorisation code.
    Phone: 1300 130 545
  4. Advise Leveraged of whether or not your trade has been completed, by 4.15pm the same day.

What it Costs

A $50 Leverage Short Sell fee applies to every executed short sell transaction, in addition to your normal Sequoia Direct brokerage fees.

Fine Print

  • You must read and agree to the Leveraged Short Plus Product Guide.
  • Short sells must be on one contract note and can’t be split between multiple sell contract notes.
  • A minimum trade value of $50,000 applies to short sell transactions.
  • A short sell position can be open for a maximum of 11 months, 15 days.
  • Minimum borrow is one day for authorised stock that has been short sold. Clients will incur interest on the borrowed stock for a minimum of one day.