Understanding Short Selling in Intraday Trading at FYERS - A Comprehensive Guide

What is short selling?


Short selling is a trade where you sell first and buy later to profit if the price falls. In India’s cash market with FYERS, this is an intraday-only activity: you must close (buy back) the same day.

How does short selling work?

  1. Sell first: Place a sell order in the stock for intraday.
  2. Price moves: If the price drops, your potential profit increases; if it rises, your loss increases.
  3. Buy back: Purchase the same quantity to close the position (square off).
  4. Same-day closure: No overnight carry in cash short selling with FYERS.

Example

  • You sell 100 shares of XYZ at ₹550 → proceeds ₹55,000
  • Price falls to ₹540
  • You buy back 100 shares at ₹540 → cost ₹54,000
  • Gross profit = ₹1,000 (before brokerage, taxes, and other charges)

FYERS rules for short selling (cash market)

  • Intraday only: Short selling is permitted only during intraday trading hours.
  • No delivery shorting: You cannot hold short positions overnight in equity delivery.
  • Auto square-off risk: If not closed, positions may be taken for exchange auction/close-out on T+1 and penalties may apply.

Tip: Use limit orders when short selling and always square off intraday positions before 3:15 PM to avoid auction risks.

Key risks (including squeeze basics)

  • Unlimited loss potential: If price rises sharply, losses can keep growing—use stop-loss.
  • Short squeeze: When many shorts rush to buy back, prices can jump faster, magnifying losses.
  • Gap & circuit risk: Gap-ups or upper circuits can delay exits.
  • Liquidity & slippage: Thin volumes can make buying back difficult at expected prices.

Alternatives for multi-day bearish views

  • Sell stock futures (requires F&O segment and margins).
  • Buy put options (defined risk).
  • Sell call options or use bearish option spreads (advanced; margin applies).

What if…

ScenarioExplanation
I short sell and forget to close my positionThe trade may be taken for exchange auction/close-out on T+1 and penalties may apply.
I want to short for more than one dayUse futures or options; cash-market shorts cannot be carried overnight.
The stock isn’t eligible for shortingThe order may be rejected or restricted; consider eligible instruments or derivatives.
Price rises fast against meExit quickly using a stop-loss or reduce size; losses can grow without limit.

Last updated: 08 Nov 2025

    • Related Articles

    • What Happens If My Intraday Short Position or Delivery Obligation Isn’t Settled?

      If you sell shares without holding them (short sell) and don’t square off before market close, it may result in short delivery. At FYERS, we handle such settlements strictly as per exchange regulations. The exchange may conduct an auction to source ...

    • How Does Early Pay-in Help You Avoid Short Delivery in FYERS?

      At FYERS, we use Early Pay-in (EPI) to make equity settlements faster and safer. When you sell shares that you already hold, we can deliver those securities to the exchange on trade day (T) instead of waiting until T+1. This helps reduce margin ...

    • How Are Option Margins Calculated?

      Option margins in India are risk based. Buyers generally pay only the premium, while sellers post margins computed by the exchange portfolio risk model (SPAN or PRISM) plus exposure. When you hedge a short option with an offsetting long leg, the net ...

    • Who are bulls and bears?

      In markets, bulls are optimists who expect prices to rise, and bears are pessimists who expect prices to fall. Understanding these views helps you decide when to buy, hold, hedge, or stay on the sidelines. Bulls – the optimists Bulls believe the ...

    • Is BTST available, and how are funds blocked?

      Yes, FYERS offers the BTST (Buy Today, Sell Tomorrow) facility, allowing clients to sell shares on T+1 day, even before they are credited to the Demat account. However, BTST is only enabled for a limited list of eligible stocks and series. ...