Short selling and closing on eToro – What’s the difference?

The terms “selling”, “trade selling” or “selling a trade” actually holds the same meaning as “shorting a trade”. Shorting or selling trade is done whenever a holding is expected to have a price drop. As you short trade, you will be selling borrowed assets with the expectation that the price will drop which you can buy back later as you gain profit. Let’s say you initiate a short trade over a specific stock and it successfully went down by 10% from its current price – this means you will also gain a profit of 10%.

To sell or short trade on eToro, you will need to make an order. There are two easy ways on how you can perform an order at eToro. The first is by going to the particular stock or market which you want to sell and simply click the “trade” button located on the right side of the page.

The other alternative to sell or make a short trade would be to choose and click the “SELL” button out of the SELL/BUY tab on the page.

After choosing sell, you’ll be directed to this pop-up page.

A confirmation that you’re on the “SELL” page would be to check if you have the message “SELL [ASSET ABBREVIATION]” over the top section of the page (within the green box on the image). You can then move on to filling out the details required from the page and press the “Set Order” button once you have reviewed and verified your order. Depending on the parameters which you have set for your order, the sell order will be executed as soon as all conditions are met.

Additionally, you should bear in mind that selling a trade involves a small amount of fee. The specific fee is viewable below the order page. This is boxed in green in the attached image.

Short Selling on eToro

As mentioned earlier in this article, “short selling” on eToro is also the same as “selling a trade”. This means that a trader anticipates a price drop in the future and wants to make a profit out of the drop.

Closing your trade on eToro

On the eToro platform, you can only close trades that you presently own. As an example, let’s say you have bought or sold positions on TSLA (Tesla Motors Inc.) last month and have earned a good amount of earnings today. If you want to lock in your profits and close the trade, you will simply need to go to your portfolio, choose and click “TSLA”  from your list of stocks. Afterwhich, you will be prompted to the next page where you can find the red “x” button on the right side of the page.  As soon as you’ve clicked the “x” button – which is the close button, you’ll get a pop-up page to confirm the close. Press “Close Trade” on the confirmation pop-up page as a final step.

When closing a trade, always make sure that you’re on the right page. Others mistake “selling a trade” with “closing a trade” – which we all know are two different terminologies that can cause a catastrophic effect on your portfolio if executed wrongly.

Quick video on selling, closing and shorting a trade on eToro.

The video below provides you with a further explanation of what shorting and selling trade is and how it works. It comes with a quick walkthrough on how you can perform shorting and selling on an actual trade.

Now that you have a better understanding of shorting, selling, and closing a trade on eToro, you now have a better chance of gaining profits when trading. An eToro Demo Account can help you put these terminologies into practice. Sign up now and build your trading skills.

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eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFDs.

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