You must be approved for margin and have an open margin account to place orders to sell short. Short sales must be entered in the short portion of your account. A short sell order can be executed only on an uptick or zero-plus tick. For listed stocks, this means that for a short sell order to be executed, the price of the last transaction must be higher than the price of the previous transaction, or equal to the price of the last higher transaction. For Nasdaq stocks, a short sale will be executed only if the trade can be done at a price higher than the previous different bid price.
Investors sometimes place buy stop orders in an effort to limit the risk of short sales.
The transaction must take place in the short portion of your account. The stock must be available to borrow. Short positions are subject to buy-in at any time if you cannot continue to borrow the security. Buying to cover means that you purchase securities to replace those you sold short. To meet the initial margin requirement for short sales, you must pay for at least 50 percent of the value of the securities sold short.