Short selling  a stock gives you the opportunity to take profits, EVEN if the market is falling hard. If you  daytrade for a living, learning to profit in a down market is important...

When you short a stock, you are essentially borrowing shares of a stock, then buying them back at a lower price. The profit you take while shorting is the difference between these two prices .

Day-traders short stocks based on indicators like negative news, chart analysis , supply and demand. or the belief that a company may have poor future earnings .

Twitter feeds filled with tweets from other active daytraders are a great way to get negative market news (and price data) in real time, BEFORE the market reacts! (You just have to follow the right people.)

Below are the top 2 products to help you short  penny stock s :

Penny stock strategies #1)  Penny Stock Egghead  — (strategies for a near secret market that can give over 1150% gains)

Microcap stock strategies #2 )  Micro-Cap Millionaire  (tricks to find the next micro-cap stock with 800% gains)

The Pattern Day Trading Rule (PDTR)

While the Bitcoin trading market is largely unregulated, the stock market has shorting regulations which are fairly strict. Laws like the PDTR  or the uptick rule  can block some attempts to short the market.

Exchanges like Suretrader (for stocks and penny stocks) and Plus500 (for CFD trading with many assets including stock and Bitcoin CFDs) allow for less shorting regulations  to help traders profit in poor market conditions. ( learn more about these exchanges below )

The Pattern Day Trading Rule (PDTR) stops traders from shorting without proper amount of margin (which is a minimum of $25,000). A pattern day trader is described as a trader who makes more than 4 trades of the same asset in 5 bus. days. If a trader is considered a pattern day trader, extra rules will apply. There are also extra regulations that the SEC has piled on since the market crisis in 2008. These new rules prohibit the shorting of stocks which have dropped more than 10% in one day.

These extra rules with PDTR only apply to margin accounts, NOT cash accounts.

New Shorting Restrictions

Pattern Daytrading Rule If you are an active trader, it may be fairly easy to be considered a Pattern Daytrader. This means you will need to deposit a higher amount of funds into your margin account. If you are a pattern trader, you MUST maintain an equity balance of $25,000 minimum in your account.

Certain exchanges can AVOID pattern day trading rules by being incorporated outside of the United States.

Suretrader is an exchange that avoids the PDTR by being incorporated in the Bahamas. Suretrader also provides high amounts of leveraging (up to 6:1). Additionally, they have a large selection of stocks (and penny stocks) which you can short. (check out Suretraders penny stock list here )

Margin Calls this rule allows stock trading exchanges to perform a margin call if you exceed the restrictions or rules imposed by the PDTR. Traders have up to 5 days to deposit the required funds, or your trading account will be restricted. If you fail to make the deposit in this 5 day period, your account can be further restricted or penalized.

New SEC Approved Shorting Restrictions in response to the recent 2008 market crisis, the SEC has instituted new rules to restrict the short selling of stocks when the price has dropped more than 10% in a one day period.

Potential Buy-ins buy-ins refer to the exchanges ability to ask for the return of your purchased shares. This can make traders sell back their stock at a loss or before they are ready to return their shares.

Minimum Margin Balance Pattern day traders must maintain a balance of at least $25,000 in their margin account if they make more than 4 trades of the same security in a 5 day period. On the other hand, if you are NOT considered a pattern day trader, you must have a minimum deposit of $2000 in your account.

The Uptick Rule — one type of shorting regulation in U.S. markets is the uptick rule. This rules blocks short selling with the exception that the last trade was placed higher than the previous trade.

Stock Exchanges With Less Shorting Restrictions

The shorting of stock and other securities is very profitable, so exchanges have made efforts to avoid these restrictions.

One way to avoid restrictions when shorting stocks is to trade them as a contract for difference (or CFD) .

When you buy or sell CFDs, you dont actually own the security. This exempts you from many shorting rules, BUT, still allows you to short the stock price.

Exchanges to Trade Stock CFDs (or Bitcoin CFDs):

The two largest online CFD trading exchanges are Plus500 and Avatrade. They have less restrictions than other exchanges, BUT currently arent available to U.S. traders.

Plus500 This CFD exchange has a large selection of assets to trade, including shares (like Facebook and Apple), commodities (like gold, oil, and silver), indicies (like the S&P 500 and the NASDAQ 100), Forex, and ETFs. They also allow up to 200:1 leveraging, without the higher amount of margin required at some exchanges or brokers.

AvaTrade Avatrade is another CFD broker which allows you to trade a variety of assets including forex, commodities, Bitcoin, indicies, and ETFs and up to 400 times leveraging. They currently have over 60 currency pairs to trade. Avatrade also has great educational materials and videos to help you get started trading CFDs.

By trading CFDs instead of the actual product, you can avoid some shorting rules because you dont actually own the security.

Exchanges Incorporated Outside the U.S. to Avoid Shorting Rules

Another way that exchanges avoid some shorting rules is to incorporate in countries which are less restrictive to short sellers Exchanges that are beneficial to short sellers  include:

Suretrader   ( < use this link to short a huge list of stocks ) this stock exchange is incorporated in the Bahamas. This avoids the PDTR. It also has a list of over 10,000 stocks which you can short. This list also includes many penny stocks which are shortable. It also removes the rules which makes U.S. traders pay $2.50 to short any stock that is under $2.50. (this can limit many shorting opportunities)

Suretrader can be good for small accounts, as the $25,000 margin account rule is not in effect. They also allow traders to open accounts with a minimum of $500.