Shorting Facebook seems to be the craze in the US equities market nowadays.
After all the commotion and hype, FB's IPO price was set at $38 a share on Friday, May 18th. The stock hit an intra-day high of $45 that same morning, then commenced what has been a downhill sleigh ride to a low of $30.94 (gaping down twice in the process; click here to see our Google+ page's blurb about the first gap).
As is always the case with investments that are either outright bubbles or at least severely overpriced and over-hyped, many buy-and-hold investors get caught with their pants (and skirts) down, as they speculate blindly and try to pinpoint a bottom…Then come the lawsuits (it never changes!), as we witnessed today when investors sued both Morgan Stanley (FB's lead underwritter) and Mark Zuckerberg's little puppy.
All of the apparent shenanigans are increasing the size of the breadline to dump FB shares and profit from a drop in price. Unfortunately, those that want to actively trade (or "scalp") the shares face (or have faced) various disadvantages. For starters, the Nasdaq Stock Market screwed the Facebook IPO so badly (starting with the half-hour trading delay on the offering day), that many investors found out hours later that they had been filled at a much higher price than they anticipated. Furthermore, those actively trading the stock going forward might have to fork over $25,000 or more to do so once they get labeled a "pattern day trader" by good'ol FINRA (Financial Industry Regulatory Authority). Those are some of the drawbacks of trading FB on the traditional US exchanges.
But you may ask a clever question, "If this is a site about Forex, why do you care about Facebook?" The answer is that normally we wouldn't, but now our traders have the ability to trade FB on the Metatrader (or MT4) platform; so this changes the entire ballgame. It sounds weird to say that you can trade Facebook on MT4, but it's true. Even though the actual instrument is the cash equivalent and not the actual stock, the prices track one another. With this setup, the pattern day trader requirement is also out the door. This means that accounts with much less 25k USD can be used to day trade the shares or sell them short.
At this point in time, you can open a demo or practice account (by clicking here) and see the Facebook symbol (FB.OQ) in the Market Watch list during regular stock market hours. To trade it, simply double click on the symbol and click either the "buy" or "sell" buttons. Until June 4th, trading of FB shares is only enabled on the demo, but starting on June 5th, real accounts will also be able to trade it. Another 37 non-FX instruments, including other popular stocks like Google and Apple, as well as the widely followed US Dollar Index and the DAX (which you can also see now on the practice account) have been added to the mix.
In the meantime, please let us know what you think and leave us your feedback below.