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I've been catching up on some of the great posts on this board and I'm ready to enlarge my "short" universe beyond securities on which I can buy puts. However, one post I read confused me about the mechanics of a short sale and I was hoping one of you veterans could clear it up for me.

I will likely trade through an online broker like eSchwab or Fidelity. If I sell a stock short, I assumed this would result in a positive cash inflow to my account which would either earn interest or which I could use to go long on other stocks (assuming I retain appropriate margin for the short position. The message I read (can't remember who posted it) seemed to indicate that several of my assumptions are incorrect. Can somebody set me straight?

Also, am I correct that I have to cover any dividends paid while short a stock? Seems to be a good reason to either avoid shorting dividend-paying stocks or be very aware of dividend payment dates?

Thanks in advance!
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