Can You Short on Robinhood? What’s actually possible in 2025? We tackle all that and more in this updated guide!
Robinhood changed the game when it launched commission-free trading back in 2013. Since then, it’s become the go-to platform for millions of retail traders looking to get into the markets without paying traditional brokerage fees. But there’s one trading strategy that’s notably absent from their platform – and it’s one that keeps coming up in my inbox.
(Speaking of trading opportunities, check out my post on Robinhood Penny Stocks to Watch)
Short selling. It’s been around forever, it’s controversial as hell, and frankly, it’s not something most retail traders should be messing with anyway. But people keep asking about it, especially after events like the GameStop saga showed just how much money can be made (and lost) betting against stocks.
I’ve been trading for over a decade now, and I’ve seen plenty of people get burned trying to short stocks they don’t understand. So let’s cut through the noise and talk about what’s actually possible on Robinhood in 2025.
Here’s what we’ll cover:
- The current state of short selling on Robinhood (spoiler: it’s still not available)
- What short selling actually means and why it’s risky
- Alternatives if you really want to bet against stocks
- Better platforms for short selling (if you insist)
- Why most people shouldn’t be shorting stocks anyway
What is Robinhood in 2025?
If you’re new to this, Robinhood is a commission-free trading platform that’s been around since 2013. Based in Menlo Park, California, they’ve built their business around making investing accessible to everyone – no minimum balances, no commission fees, and a simple mobile-first interface.
They make money through payment for order flow (sending your trades to market makers), interest on cash balances, and their premium subscription service Robinhood Gold. It’s a legitimate business model, though it’s faced scrutiny from regulators over the years.
The platform has evolved significantly since its early days. They’ve added features like fractional shares, crypto trading, retirement accounts, and even a credit card. But one thing they’ve consistently avoided? Short selling.
And honestly, that’s probably for the best. Robinhood’s user base skews young and inexperienced, and short selling is one of the fastest ways to lose more money than you have. The platform’s design philosophy has always been about keeping things simple and reducing the ways users can seriously hurt themselves financially.
Can You Short on Robinhood? Still No, Here’s Why
As of 2025, Robinhood still does not offer traditional short selling capabilities.
This isn’t an oversight or something they plan to add soon. It’s a deliberate business decision that aligns with their mission of protecting retail investors from themselves.
What About Put Options?
Now, Robinhood does offer options trading, including put options. Some people think buying puts is the same as shorting, but it’s not. When you buy a put option, your maximum loss is limited to what you paid for the option. When you short a stock, your potential losses are theoretically unlimited.
You can also sell covered calls or buy inverse ETFs on Robinhood, which can profit from declining stock prices. But these aren’t true short selling either – they’re different strategies with different risk profiles.
The Alternatives People Try
I’ve seen people suggest using other brokers like Webull or Interactive Brokers for short selling while keeping their main account on Robinhood. That’s fine if you want to complicate your life, but it defeats the purpose of having everything in one place.
Others try to get creative with options strategies to simulate short positions. Again, these aren’t the same thing and often end up being more expensive and complicated than just buying puts if you think a stock is going down.
What is Short Selling?
Short selling is borrowing shares of a stock you don’t own, selling them immediately at the current market price, and hoping to buy them back later at a lower price. You keep the difference as profit.
Sounds simple, right? Here’s the catch – if the stock goes up instead of down, you have to buy it back at the higher price. And since stocks can theoretically rise infinitely, your potential losses are unlimited. That’s very different from buying a stock, where the worst case scenario is losing what you invested.
Let’s say you short 100 shares of XYZ Corp at $50 per share. You receive $5,000 immediately. If the stock drops to $40, you can buy back the shares for $4,000 and pocket $1,000 in profit (minus fees and interest). But if the stock jumps to $80, you’d have to pay $8,000 to buy back those shares – a $3,000 loss on your $5,000 position.
And that’s just the beginning. Short selling requires a margin account, which means you’re borrowing money from your broker. You’ll pay interest on that borrowed money, and your broker can force you to close your position at any time if they can’t locate shares to borrow.
How Short Selling Actually Works
Since we’re talking about it, let me walk you through how shorting works on platforms that actually allow it:
Step 1: Find a Short Candidate
You need to identify stocks you think are overvalued and likely to decline. This isn’t about picking companies you don’t like – it’s about finding real fundamental or technical reasons why a stock should trade lower.
Some things short sellers look for:
- Stocks trading well above their historical averages
- Companies with deteriorating fundamentals but rising stock prices
- Technical indicators suggesting a trend reversal
- High volume spikes on questionable news
- Stocks rallying while the broader market declines
This requires serious research skills and market experience. You’re essentially betting against the collective wisdom of all the buyers in the market.
Step 2: Plan Your Exit
Before you even enter a short position, you need to know when you’ll exit. Set profit targets and, more importantly, stop-loss levels. When to sell stocks applies to short positions too – you need discipline to stick to your plan.
The biggest mistake I see is people holding losing short positions hoping they’ll eventually be right. Meanwhile, the stock keeps climbing and their losses keep mounting.
Step 3: Execute the Trade
Once you have a plan, you borrow the shares and sell them. Your broker handles the mechanics, but you’re responsible for the interest costs and any dividends paid while you hold the short position.
Step 4: Manage the Risk
This is where most people fail. Short selling requires constant monitoring because your risk increases as the stock price rises. You might need to add more collateral to your account, and your broker might force you to close the position if they can’t locate shares to borrow.
Is Short Selling Legal?
Yes, short selling is legal in the United States. Robinhood’s own article confirms this, though they explain why they don’t offer the feature.
However, there are regulations around it. Naked shorting (selling shares you haven’t actually borrowed) is illegal. The SEC also has rules about short sale restrictions during market volatility.
The practice gets controversial because you’re essentially betting on companies to fail. Critics argue it can create downward pressure on stock prices and harm companies trying to raise capital. Supporters argue it provides necessary liquidity and helps correct overvalued stocks.
Recent events like the GameStop short squeeze have brought renewed attention to the practice. Retail traders organized to drive up heavily shorted stocks, causing massive losses for hedge funds and highlighting the risks involved.
Pros and Cons of Short Selling
Let’s be realistic about what short selling offers:
Potential Advantages:
- Profit potential in declining markets when most strategies lose money
- Can be used as a hedge against other long positions
- Helps provide market liquidity and price discovery
- Can generate significant returns if you’re right about overvalued stocks
The Reality of Disadvantages:
- Unlimited loss potential – this isn’t theoretical, people lose everything
- You pay interest on borrowed shares, eating into profits
- Timing is critical – you can be right about direction but wrong about timing
- Short squeezes can force you out at the worst possible moment
- Dividends and corporate actions add complexity and costs
- Regulatory restrictions can limit your ability to enter or exit positions
Better Alternatives for Bearish Bets
If you think a stock or market is going to decline, there are better ways to profit than short selling:
Put Options
Available on Robinhood, puts give you the right to sell a stock at a specific price. Your maximum loss is the premium you pay for the option. Much safer than shorting, though options can expire worthless.
Inverse ETFs
These funds are designed to move opposite to their underlying index. If you think the S&P 500 will decline, you can buy an inverse S&P 500 ETF. Your maximum loss is what you invest, and you don’t need a margin account.
Bear Call Spreads
An options strategy that profits when stocks decline or stay flat. More complex than buying puts, but can be more cost-effective for certain market conditions.
Just Stay in Cash
Sometimes the best trade is no trade. If you think markets are overvalued, preserve your capital and wait for better opportunities rather than trying to profit from declines.
Platforms That Do Allow Short Selling
If you’re determined to short stocks, here are some brokers that offer the capability:
- Interactive Brokers: Professional-grade platform with extensive short selling capabilities
- TD Ameritrade: Good research tools and reasonable rates for short selling
- E*TRADE: Solid platform with options and short selling features
- Charles Schwab: Full-service broker with short selling available
- Webull: Commission-free like Robinhood but offers margin and short selling
Keep in mind that all of these require margin accounts and have minimum equity requirements for short selling. You’ll also pay interest on borrowed shares and may face restrictions on which stocks you can short.
Why Most People Shouldn’t Short Stocks
Here’s some honest advice: unless you’re an experienced trader with significant capital and risk management skills, you probably shouldn’t be shorting stocks.
The statistics aren’t great. Most short sellers lose money over time, and even professional hedge funds struggle with the strategy. The combination of unlimited risk, timing requirements, and market psychology makes it one of the most difficult ways to make money in markets.
I’ve seen too many traders get wiped out trying to short during bull markets or getting caught in short squeezes. The GameStop situation wasn’t unique – it’s just what short squeezes look like when retail traders coordinate their efforts.
If you’re new to trading, focus on building a solid foundation with long-only strategies first. Learn how to trade stocks profitably before adding the complexity and risk of short selling.
And honestly? There are usually better ways to make money than betting against stocks. The market has an upward bias over time, so you’re fighting against the natural tendency of prices to rise.
The Bottom Line
Robinhood doesn’t offer short selling, and that’s probably doing their users a favor. The platform is designed for simple, straightforward investing, and short selling is anything but simple.
If you think a stock is overvalued, buy puts instead. If you think the market is due for a correction, consider inverse ETFs or just stay in cash. These alternatives give you similar exposure without the unlimited risk of short selling.
For those absolutely determined to short stocks, you’ll need to use a different broker with margin capabilities. Just remember that short selling is a professional-level strategy that requires significant experience, capital, and risk management skills.
The most successful traders I know focus on finding good companies to buy and hold, not trying to time the market’s declines. That might not be as exciting as shorting the next overvalued meme stock, but it’s a lot more likely to build wealth over time.
Final thoughts: Trading should enhance your financial wellbeing, not jeopardize it. Short selling, while legal and sometimes profitable, carries risks that can quickly turn devastating. If you’re looking for ways to profit from market declines, stick with strategies that limit your potential losses to what you’re willing to risk.
