A time will come when you’ll want to sell stocks, either to shed what seems like a perpetually underperforming company, or to capitalize on a high price and cash in on the risk you took years ago. Let's walk through how to sell stock and what choices are available to you.
How to sell stock
When you’ve decided to sell your stocks, here are the steps you'll need to take.
1. Access your stock via brokerage or financial advisor
2. Choose your order type
3. Fill out the trade ticket
1. Access your stock
Note that regardless of how you choose to sell, you're constrained to the regular trading hours of stock exchanges (typically between 9:30 a.m. to 4 p.m EST.)
Through your brokerage
Selling your stocks directly through your brokerage is probably your safest bet to dump shares the quickest. Whether you use a traditional brokerage or an investment app, you'll most likely be able to easily access your portfolio online or through your cell phone when you're ready to sell. Keep in mind that traditional brokerages always charge a sales commission every time you buy or sell stocks, whereas trading is often done free of charge on investing apps.
If you’re an active investor or options trader looking for a way to save money on trades, you may want to check out discount broker tastytrade. The online service has some of the lowest prices around.
Team up with a financial advisor
If you're already working with a financial advisor to manage your portfolio, you can reach out to them to make sales on your behalf. Usually your advisor will sell stocks within 24 hours under your instruction, but overall can take longer than if you were to sell on your own. Make sure to always speak with your advisor directly or request the trade in writing. It's best not to send an email or leave a voicemail requesting the trade as those can be missed. It can be difficult to entrust another person with your wealth, so if you're recruiting financial advisors for help, make sure they're a fiduciary — meaning they're legally obligated to put your interests ahead of everything else. Nowadays you can even get in touch with fiduciary financial advisers online.
2. Choose your order type
Order types manipulate the timing of sales. By choosing the correct order type for your sale, the goal is to minimize losses and maximize gains.
3. Fill out the trade ticket
If you’re selling stock through a broker, you must use a trade ticket to start the sale on the website or platform. Most sales settle up to two business days after the date of the order.
It’s easy to complete a trade ticket. Select "sell", enter the company's ticker and how many shares you’re selling, the order type, a stop price and limit price if applicable, and how long your trade should be open for (known as the time-in-force).
Time-in-force options
You have several choices for the time-in-force.
| Time-in-force Option | Description |
|---|---|
| Day | Trades cancel and orders expire if they are not filled by market close. This is usually the default option. |
| Good-til-canceled | Trades remain active until they are either filled or cancelled. Brokers tend to limit how long a Good-til-canceled can remain open. |
| Fill-or-kill | Use when trading lots of shares. Trades are canceled if the entire order is not filled. |
| Immediate-or-cancel | Orders must be filled immediately. Trades are canceled if the entire order is not filled. |
| On the open | Fills at marketing opening price. |
| On the close | Fills at marketing closing price. |
With most trades, you'll want to leave the default ‘Day’ option. You can explore the other options as you become more familiar with trading stocks.
Once you’ve completed the trade ticket, make sure you check it over to ensure all the information is correct before submitting — you don’t want to be selling the wrong one at a less than desirable price.
Know before you sell any stock
Be sure you're selling a stock for the right reasons. If you're selling because you've made a tidy profit, that's all well and good, but selling at a loss becomes a trickier situation. A sudden market drop is almost never a good reason. The stock market can be volatile — thanks to panicking investors — so pulling out your trade position when things get rocky will only cement your losses. To free up liquid cash, you may want to consider exploring other options first. If you end up considering a sale either way, take a closer look at the company behind the specific stock. Weigh your overall financial strategy against the caliber of the company's CEO, the current market realities (is it a dying industry?), long-term revenue (or revenue decline) and so on before making your decision.
Alex Denholm was a freelance contributor to Moneywise.
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