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How to Sell Stock: A Guide for Beginners

Sep 17, 2024
4 min read
Table of Contents
  • 1. 1. Know when to sell stocks
  • 2. 2. Decide on an order type
  • 3. 3. Fill out the trade ticket

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You sell stock by placing an order with your broker. You fill out an order form that will ask what stock you want to sell, if you want to sell in shares or dollars, how much you want to sell, and if you want to sell via a market or limit order. Here is 3 steps guide to selling stocks:

 

1. Know when to sell stocks


When you sell depends on your investing strategy, your investing timeline, and your tolerance for risk.

Sometimes though, loss aversion and fear get in the way. There are good reasons and bad reasons to sell stocks. Check your emotions when you're ready to pull the trigger.

There are valid reasons for selling a stock, such as consistently poor performance compared to competitors, decisions by management that you don’t agree with, or feeling that your money could be better invested elsewhere. You might also sell to harvest losses for tax purposes and offset other gains.

On the other hand, selling for the wrong reasons often stems from impulsive reactions to short-term market fluctuations or isolated company news. Selling during downturns only locks in losses, which goes against the "buy low, sell high" strategy. Before deciding to sell, revisit the reasons you bought the stock. Did you have a plan for what would trigger a sale? Take a moment to ensure you’re not making an emotional decision that you might regret later.
 


2. Decide on an order type


If you’re familiar with buying stock, you’re familiar with selling it — the options for order types are the same. The goal, however, is different: You use order types to limit costs on the purchase of stock. On the sale, your main objective is to limit losses and maximize potential returns.


Market order
A market order is a request to buy or sell a stock at the best available price in the market. It prioritizes the speed of execution over price, ensuring the trade happens quickly, though the exact price is not guaranteed. This type of order is ideal when your main objective is to complete the trade promptly. It’s commonly used when you believe the stock’s current price is fair, are certain you want the order filled, or need the transaction to be executed without delay.

 

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Limit order
A limit order is an order to buy or sell a stock with a restriction on the maximum price to be paid (with a buy limit) or the minimum price to be received (with a sell limit). If the order is filled, it will only be at the specified limit price or better. However, there is no assurance of execution. A limit order may be appropriate when you think you can buy at a price lower than—or sell at a price higher than—the current quote.

Stop order
A stop order is an order to buy or sell a stock at the market price once the stock has traded at or through a specified price (the "stop price"). If the stock reaches the stop price, the order becomes a live market order and is typically filled at the next available market price.

Stop-limit order
A stop-limit order combines two types of orders. First, it includes a stop-loss order that activates when the stock reaches a specified trigger price. Once triggered, a limit order is placed, which will only execute if the stock price reaches the predetermined limit. Both components are set simultaneously, but the limit order only comes into play after the stop-loss condition is met.
 


3. Fill out the trade ticket


If you're selling through a broker, their website or trading platform will provide a trade ticket or order form for you to complete in order to initiate the sale. Typically, with most brokers, the trade will settle—meaning the cash from the sale will be deposited into your account—two business days after the order is executed.

Filling out the trade ticket is straightforward: you’ll select "sell," enter the stock symbol, the number of shares, choose your order type (including any limit or stop price, if applicable), and specify the "time in force" or order expiration, which determines how long the order remains active.
 



When considering shares, indices, forex (foreign exchange) and commodities for trading and price predictions, remember that trading CFDs involves a significant degree of risk and could result in capital loss. 


Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.
 


Risk Warning: this article represents only the author’s views and is for reference only. It does not constitute investment advice or financial guidance, nor does it represent the stance of the Markets.com platform.When considering shares, indices, forex (foreign exchange) and commodities for trading and price predictions, remember that trading CFDs involves a significant degree of risk and could result in capital loss.Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice. Trading cryptocurrency CFDs and spread bets is restricted for all UK retail clients. 

Frances Wang
Written by
Frances Wang
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Table of Contents
  • 1. 1. Know when to sell stocks
  • 2. 2. Decide on an order type
  • 3. 3. Fill out the trade ticket

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