You can only sell a stock short in a margin account that has been approved for margin trading. A margin account lets you borrow shares, which is necessary for short selling.
To enable short selling, your account must meet minimum equity requirements established for margin privileges. Among these is maintaining at least $2,000 in usable margin equity, excluding options positions and deposits that haven’t settled.
Not all stocks can be shorted. A security must have shares available to borrow, and availability can change with market conditions and lender supply. When shares are not available to borrow, you are not able to open new short positions in that stock. On the asset page of the stock in the Shorting section you can see the current availability of shorting the stock.
Short positions are also subject to ongoing maintenance requirements. These requirements are calculated as a percentage of the current market value of the position, and for some lower-priced stocks, a minimum per-share equity requirement may apply.
For example, if a stock is trading at $14 per share and the maintenance requirement is the greater of 25% of market value or $5 per share, the $5 minimum would apply, since 25% of $14 is $3.50. This results in a higher per-share maintenance requirement for lower-priced stocks when opening or maintaining a short position.
How can this affect my account?
Maintenance requirements affect how much equity you must keep in your account to support a short position. If your account equity falls below the required level, you may be required to add funds or reduce positions, and your short position may be restricted or closed. Learn more here by reviewing the maintenance requirements for shorting stock. The maintenance requirements FAQ is located here, for more details regarding maintenance requirements.
The start of each day short positions are marked to market and the profits or losses based on yesterday's closing prices are transferred between your cash account and short cash account with a value date the following business day. The short cash account is the account that reflects open shorts, where position value is the negative market value of the short and cash captures the:
Short sale proceed(s), which is the received proceeds from the initial sale of the shorted stock(s) and
Accumulated mark to market from opening the short position(s)