How come scottrade won't let me short stocks less than 5 dollars?

Answer 1

You do realize that shortng a stock puts u in a position of infinite risk. Normally, when u invest, the ost u can lose is your investment. When shorting stocks, you can lose a whole lot more.

In expensive stocks tend to be risky. If you cannot cover the short, the broker is out. In fact, they probably have to put a large amount of cash reserves aside for that very contingency. Therefore, they just do not want to get involved.

Answer 2

might be a little volatility, it might be liquidity. Stocks that are illiquid can jump into short squeezes very easy and then be hard to cover.