Short selling - how to for a UK retail investor

ali_bear

Hello
I am looking into how to make money from shares that are falling in value. I've heard of "short selling" and would like to find a broker or trading platform that will allow me - as a UK retail investor - to do this on UK or NYSE shares. 
Obviously there is considerable risk involved. I am fairly experienced with my S&S ISA. I have some savings I can afford to gamble in this way (outside of the ISA which is fully subscribed). 
Can anyone recommend such a service? 
Thanks, 

fwor

If you're completely confident about your ability to predict future falls then, as a retail investor, you should maybe be looking at CFDs with a company such as Trading212 (there are others).

Note the risk warning on their website that says: "83% of retail investor accounts lose money when trading CFDs with this provider." You can expect that outcome to be approximately the same, whatever the provider (unless you pick one of the scam "providers", in which case that will go up to 100%).

jimjames

ali_bear said:

Hello
I am looking into how to make money from shares that are falling in value. I've heard of "short selling" and would like to find a broker or trading platform that will allow me - as a UK retail investor - to do this 

If you've only "heard of short selling" then I'd definitely suggest it isn't something to do until you have a lot, lot more knowledge. Trading on NYSE also exposes you to exchange movements, over 1% today even if the shares were static.

ali_bear

I've heard they also talk funny over there? 

Thanks I'll take a look at that company 

bd10

Just to add to the dangers of short selling mentioned aboved, GMO's Jeremy Grantham said in interviews that only a handful of fund managers are brilliant enough to pull it off. GMO did go short US tech against their own VC investments as hedge. But they went short an index not an individual company.

An alternative to CFDs would be exchange traded options on Eurex, CBOE etc for which you'd need an appropriate account and being comfortable with options maths esp greeks would feel natural.

ali_bear

bd10 said:

Just to add to the dangers of short selling mentioned aboved, GMO's Jeremy Grantham said in interviews that only a handful of fund managers are brilliant enough to pull it off. GMO did go short US tech against their own VC investments as hedge. But they went short an index not an individual company.

An alternative to CFDs would be exchange traded options on Eurex, CBOE etc for which you'd need an appropriate account and being comfortable with options maths esp greeks would feel natural.

What sort of account and who offers those? 

Just to be clear I have a masters degree in electrical engineering. Calculus is no stranger. 

GeoffTF

Interactive Brokers offers all sorts of racy stuff. Options are the most mathematically interesting. Two guys won the Nobel Prize for Economics for working out how to price them. If you just want to make money, buy a global tracker.

jaypers

I like and understand investing in equities but I don’t really understand about short selling other than the concept. What I do know is that it is incredibly high risk and you’re likely to lose a lot of money. Something for traders but maybe not private individuals. 

bd10

ali_bear said:

bd10 said:

Just to add to the dangers of short selling mentioned aboved, GMO's Jeremy Grantham said in interviews that only a handful of fund managers are brilliant enough to pull it off. GMO did go short US tech against their own VC investments as hedge. But they went short an index not an individual company.

An alternative to CFDs would be exchange traded options on Eurex, CBOE etc for which you'd need an appropriate account and being comfortable with options maths esp greeks would feel natural.

What sort of account and who offers those? 

Just to be clear I have a masters degree in electrical engineering. Calculus is no stranger. 

That's great that you're no stranger to calculus so you know what your gamma and vega is :-)

Interactive Brokers would be your best bet here in UK. (Personally I'd stay away from Degiro based on a blog story I read by Amsterdamtrader where it turned out that Degiro took the other side in some instances.) Have a look at their instrument search functionality whether they list the underlyings you'd be interested in. I would also contact them regarding short options and account size requirements. (Incidentally I contacted them wrt short options on futures where I'd take delivery of the underlying which would have been fine for me as I had futures positions on, but for that sort of stuff IB is really risk averse, min a/c size they said would be 100k.) Just in case you want to play some option spreads instead of a single long put. I believe IB does offer spreads natively (if available for the underlying).

TD Think of Swim may be another alternative. Sosnoff's platform which he sold to TDA, looks pretty good and is heavily geared towards options trading too.

fwor

ali_bear said:

Just to be clear I have a masters degree in electrical engineering. Calculus is no stranger. 

Two acquaintances of mine - both Physics graduates - decided to have a dabble in CFDs a few years back ("Play money" - £5k each). They both did really really well right up until the point where they lost the lot. Neither tried again.

I doubt that calculus will help you predict the future any better than any other branch of maths.

DragonCapsule

If you short a stock, you have unlimited liability. If you do this, try and find an etf that is short an index, which limits the downside. But remember in the 10 richest list, no one shorts stocks, they are all long stocks.