How does a short account work? How does a short account work?
Short selling is defined as the practice of selling an asset that an investor does not own in the anticipation of a decrease in the asset's price. The client borrows the shares from TD Direct Investing and then sells them in the market.
The investor takes on an obligation, when initiating a short sale, to return the shares they borrowed. In an ideal scenario, the price drops and the investor buys the shares back from the market at a lower price, thereby closing out their obligation to TD Direct Investing.
Risks include:
Short sellers are subject to a buy-in of their position at any time regardless if the position is protected or unprotected, and are liable for all costs associated.
Short sellers are responsible for dividend charge-backs and any other distributions while they are short.
Unlimited upside potential loss.
Securities which cannot be Short Sold
Securities trading under $1.00
Nasdaq Bulletin Board and Pink Sheet Securities
U.S. Securities that are not on the Protected List.
Securities on the credit watch list with 0 loan value