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How to Find Stocks to Trade - Live Tutorial Shorting Stocks - YouTube
Channel: Humbled Trader
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you'll lose it
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you owe me forty thousand dollars
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so you want to learn how to short sell
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and make money from stocks falling off
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in this video i'm going to show you the
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four steps to successfully profit from
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short selling stocks and i'm talking
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about the practical steps such as
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finding a prime target in real life
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trash talk about the stock how to find
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stock to short on your broker then
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executing a short sale and collecting
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those sweet sweet profits now are you
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ready to go on this short selling
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journey with me today this is going to
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be an adventure
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but before we go make sure to smash the
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like button and subscribe so we can all
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donate to elon musk's short foundation
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all right step one to short selling get
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out of your home office and away from
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your trading computer to the real world
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and find companies you hate in real life
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alright let's go
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[Music]
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okay i know this step might be optional
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but it's a great way for us generate
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short sellers to get out of the house
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into the real world and do some real
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life market research
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you see this tesla model y it's bought
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from the profit from short selling tesla
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stock
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this is the rivian office this is
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supposed to be worth 100 billion dollars
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at once come on
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i've definitely spent a lot of money on
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the starbucks drinks but not the stock
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let's be real here sometimes their
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coffee
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tastes like my grandmother's diarrhea to
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be honest i think i've spent more money
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on these lululemon pants they have made
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money trading the stock check out these
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sick cars behind me and the nice
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t-shirts this is really really nice
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oh wait but the glass is dirty this is
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why you gotta short the stock
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you'll lose it
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you owe me forty thousand dollars
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okay now that we've selected our targets
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in real life it's time for step number
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two find shares to short on your broker
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[Music]
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[Applause]
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all right now it's time to short sell
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okay now that we're back at our trading
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computer it's time to find stocks to
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short remember in our last video called
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short selling for beginners i explained
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that to short a stock you must first
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borrow the shares to short from your
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broker essentially you are borrowing
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something you don't own to sell to
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someone else first this is the weird
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business of short selling and don't
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worry let me show you the technical
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steps now when short selling stocks your
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target you'll lose it
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generally fall under two categories easy
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to borrow stocks which is often
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abbreviated
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as etb and hard to borrow stocks htb
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and the process of finding shares to
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short and executing a short sale on
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these two categories could be quite
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different and these stock shares you
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want to borrow from your broker are
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called short locates borrows or shares
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to borrow they all mean the same thing
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let's start with the easy to borrow
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stocks first if a stock is easy to
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borrow it means they are free to borrow
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from your broker you pay zero dollars to
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loan the shares to short a stock so for
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example i could short tesla starbucks or
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even merging stock for free intraday and
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obviously this is great to see generally
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speaking large cap stocks are often free
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to borrow you can find whether a stock
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is easy to borrow or not on your montage
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window you'll see this s sign besides
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your ticker symbol for most of the
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platforms that means the stock is etb
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and you can short sell these stocks for
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free now moving on to step number three
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executing the short sale on your broker
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platform and let me demonstrate the
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short sale on one of my platforms here
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xero pro by trade zero go to your
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montage window select the number of
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shares you want to short
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and then click short to execute the
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short sale
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as demonstration purposes here i shorted
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1 000 shares of this stock at 8.42
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it's a very similar setup on my other
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broker platforms as well this is
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interactive brokers connected to dash
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trader pro i often select the stock to
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short and then number of shares and then
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click sell to execute the short sale
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okay so the process of step number two
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finding stocks to should sell and step
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number three executing the short seems
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pretty straightforward for easy to
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borrow stocks right
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now we gotta talk about shorting the
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hard to borrow stocks there's a lot more
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consideration needed when it comes to
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shorting these ones that you must be
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aware of if you watched this video so
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far and enjoyed this kind of
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presentation breaking down the steps of
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short selling and locating stocks to
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short then please remember to hit the
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like button and let me know in the
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comment section below if you want me to
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film more fun and educational videos
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like these in the future okay back too
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hard to borrow socks i mean it's in the
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name after all hard to borrow stocks
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that means it's going to cost you extra
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extra money usually when a stock is not
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easy to borrow that means it's more
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difficult for the brokers to find those
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shares to short think about you know
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pump and dump penny stocks or during the
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wall street bets movement when gamestop
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went all the way to 500
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when a stock price is obviously too high
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and it's very likely to come back down
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to earth that's when a stock becomes
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hard to borrow because the demand to
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short a stock is high and often these
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stocks have lower shares counts so the
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supply to shoot them is limited hard to
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borrow stocks are hard to find and they
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cost a lot more money to locate when the
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stock is htb you won't be able to see
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the s symbol on your montage
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like this stock right here you can see
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that it's a lower float small cap penny
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stock you can see it went to a high of
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seven dollars from two dollars just a
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couple days ago it's very likely going
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back down to earth shares float is only
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about 20 million shares so limited
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shares available out there in the market
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for sure and you would often see this
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with other small cap penny stock pump
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and dump stocks they are generally all
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hard to borrow so that means you need to
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pay in order to locate them to short in
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order to get these hard to borrow stocks
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to short you need to be using brokers
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that have an extensive inventory of
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stocks to short for example trade 0
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cobra trading or center point securities
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let me show you what that looks like on
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my platform right now
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so this is a platform xero pro by trade
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zero to locate a hard to borrow stock to
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short first you need to go to the short
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locate window here
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type in a symbol
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and now we need to press enter to look
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up the cost to borrow these stocks
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now if i'm okay with the cost and i want
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the locate then i just click ok
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and there you go you can see that these
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locates are available in your short
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inventory
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trade zero is by far one of the best
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when it comes to hard to borrow stocks
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inventory especially if you're having
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accounts under thirty thousand dollars
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and a lot of times they have shares to
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short on certain extremely hard to
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borrow stocks that i really couldn't
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find anywhere else and they've recently
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come back to canada i know in canada
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there's limited broker options so i'm
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very happy to see trade zero back in
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canada they're also available in the u.s
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and other countries as well now let's do
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the same process at my cobra trading
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platform now and see what that looks
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like you can see to go locate a stock go
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to the short locate window
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type in the symbols you're looking for
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and the number of shares and click
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inquire to see the cost and if you're
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okay with the cost then click locate
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order
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and that's it
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so all these brokers i just mentioned
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trade zero cobra and centerpoint they
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are the best brokers when it comes to
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short selling and hopefully this answers
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many of the frequently asked questions i
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get about which brokers to use for short
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selling i've account with all of them
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and i personally use them to short sell
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stocks again if you have a small account
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under thirty thousand dollars or if
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you're in canada then trade zero is your
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best choice when it comes to shorting
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hard to borrow stocks i'm working with
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them to get a deal for you guys to get
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one month of 10 off on your locate fees
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and three months of free platform which
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is xero pro the link to sign up is in
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the description below if you're
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interested cobra trading and center
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point are great for accounts over thirty
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thousand dollars however they're not
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available for canadians you'll still get
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some discounts if you sign up through my
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link down below too i would only
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recommend brokers i personally use and
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these are all great choices the three
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short selling brokers they all have a
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lot of easy to borrow large cap stocks
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same as interactive brokers now it's
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time for step number four
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finding cost efficient ways to spend on
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locate okay so now we learned how to
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find stocks short and the best brokers
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to short now let's talk a little bit
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more about the cost of locating stocks
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well yes paying for locates is part of
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the business it's all a business expense
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that can be used to write off against
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your trading profits there's still
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definitely some smarter ways to decide
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whether you want to short a stock or not
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because when i first got my hands on one
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of these short selling brokers i went
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ham
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and located way too much and spends way
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too much money on locate fees so i want
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to offer you some tips when it comes to
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deciding how much and when to spend
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money on locates first tip i have for
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you is the 1
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rule generally speaking a locate cost
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should not be more than one percent of
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the stock price for example a five
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dollar small cap stock should not cost
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more than five cents per share to locate
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ideally they should cost around one cent
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or two cents or if they really cost more
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than one percent which is more than five
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cents then they better be able to give
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you a lot more range to the downside let
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me show you what i mean in just a little
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bit another example here is the stock
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dewac since it's about 40 to 50 dollars
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this stock should not cost you more than
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four to five dollars to short for sure
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in fact they cost about two cents on
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trade zero so that's very very cheap
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okay so now we know about the one
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percent rule but what if the stock
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actually cost more than one percent to
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locate like we mentioned earlier
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if that's the case then you need to
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determine the potential downside for the
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stock to make sure it's worth it if a
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stock is going to cost me one dollar to
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locate for 1 000 shares that's one
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thousand dollars of locate cost then you
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better be able to give me a one to four
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risk reward or even greater
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meaning that i want to look at a chart
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for the stock and see that the short set
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up on this stock can tank more than four
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dollars to a downside to make sure my
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cost on the locate is worth it so i want
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to spend a thousand dollars to
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potentially make four thousand dollars
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remember paying for locate is all
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business expenses in trading especially
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short selling you need to be able to
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spend money to make even more money
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especially on these golden opportunities
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if you want to learn more about my short
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selling strategies or risk management
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then feel free to check out the humble
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trader community in the link below thank
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you guys so much for watching as always
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i'm the humble trader and i'll see you
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guys next time
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[Music]
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[Applause]
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[Music]
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