Can I short sell ASX shares as CFDs?
Verdict
- Yes. With a share CFD you go short by selling to open, and Pepperstone, our pick, offers this on 200 ASX shares at 0.07% commission per side, under ASIC licence AFSL 414530.
- You need 20% margin at the 1:5 retail limit, and losses grow as the price rises; negative balance protection stops them going beyond your account balance.
- Short positions are debited the dividend amount if held over an ex-dividend date, and overnight financing applies.
- Pepperstone's stops aren't guaranteed, so a takeover bid or strong results can gap a short through its stop; Capital.com offers guaranteed stops.
Shorting through a CFD avoids the borrowing arrangements that make short selling the actual shares impractical for most retail investors. You simply sell the CFD and buy it back later. The mechanics are easy; the risk profile is what needs attention.
How shorting works at Pepperstone
On any of Pepperstone's 200 ASX share CFDs you place a sell order to open and a buy order to close. You don't arrange a stock loan, and you don't need a margin lending account. Margin is the same 20% as for a long position, commission is 0.07% each way with no minimum, and the account can be held in AUD and funded from $10. Before relying on a short, check that the platform accepts a sell order on that symbol.
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A short trade in numbers
You short 1,000 share CFDs at A$8.00, a A$8,000 position needing A$1,600 of margin and A$5.60 commission to open.
| Scenario | Close price | Gross result | Commission in and out | Net |
|---|---|---|---|---|
| Share falls 10% | A$7.20 | +A$800 | A$10.64 | +A$789 |
| Share rises 15% | A$9.20 | −A$1,200 | A$12.04 | −A$1,212 |
Costs that apply to short positions
- Dividends: if you're short over the ex-dividend date, the dividend amount is debited from your account.
- Financing: shorts held past the daily cut-off pay or receive overnight financing depending on interest rates.
- Commission: 0.07% on the opening sell and the closing buy, charged on the value at each point.
Risks that hit short sellers hardest
- No ceiling on the price: a long can lose at most its full value, but a short keeps losing as the price climbs.
- Takeover bids: a bid at a premium can lift a share 20% or more overnight, past any ordinary stop.
- Trading halts: you can't close while a share is suspended, and it may reopen far higher.
- Crowded shorts: when many traders are short, good news can force rapid buying.
- Guaranteed exits: Capital.com (AFSL 513393) offers guaranteed stop-losses; Pepperstone does not.
Shorting the market instead of one company
If your view is on the ASX as a whole, a short AUS200 index CFD removes single-company risk such as takeovers. At Pepperstone it carries no commission and a published average spread of 1.5 points, and index margin is lower than for shares.
Sources
Commission, ranges and leverage as published.
Do I need to borrow the shares to short a CFD?
No. You sell the CFD to the provider; there is no stock loan for you to arrange.
Can I short US shares the same way?
Yes. US share CFDs at Pepperstone short the same way, with commission of $0.02 per share per side.
Can my losses exceed my deposit on a short?
Not as a retail client at Pepperstone, which restores a negative balance to zero; you can still lose your entire balance.
Short selling share CFDs is high risk: CFDs are complex and leveraged, and a rising share price can cause rapid losses. Read Pepperstone's PDS and TMD before trading. This page is general information and not investment advice.