How to Sell Stocks – 5 Tips on how you can Sell your Stocks

How do I sell my stocks? Many investors today find themselves confronted by this question and with good reason.

When selling stocks, investors should first educate themselves on how to sell stocks and take all necessary precautions in order to protect their investment yields. 

Tips on How to Sell your Stock

1. Know when to Sell

A big part of knowing how to sell stocks is to know when to sell. While purchasing stocks at the right price has a significant effect on the overall investment yields, selling at the correct price is more important. 

Investors can determine if it is the right time to sell stocks by checking stock charts online to know when the best opportunity arises. In instances where the investor is able to purchase the stock at the correct price, he or she may later decide to resell the stocks in cases where: 

  • Rapid stock price appreciation occurs
  • The value does not justify the price
  • “Yield on cost” for the stock is lower than 2%
  • There is a high opportunity cost

2. Select the Right Method 

There are many different methods available to investors today for conducting stock sale transactions, and choosing the right method is a major part of knowing how to sell stock.

An investor may choose to sell his or her stocks online, through a brokerage firm, a bank or directly through that company from which the stock was purchased.

Brokers are highly recommended for individuals with little or no knowledge on how to sell stocks. 

3. Choose a Competent Brokerage Firm

For investors who plan to carry out several transactions in the future the best option is to hire a brokerage firm.

There are many firms offering brokerage services to investors today. However, not all brokerage firms offer the same quality of services.

A detailed analysis should be done on all the firms in question to determine where to set up the account.

Full services firms are more likely to provide professional assistance and offer comprehensive information on how to sell stock but will generally come at a higher cost.

Investors who do not plan to conduct any future transactions can open an online brokerage account as a cheaper option. 

4. Collect all Paperwork before Depositing your Stocks into the Account 

Investors should collect all necessary paperwork and consult with the assigned broker to fully understand the trading process before depositing stocks into the account. Following this, the investor will then sign his or her name on the back of the stock certificate in the same format that it appears on the front and enter all additional relevant information before forwarding the shares to the designated destination. 

How to Sell Stocks - Tips on how you can Sell your Stocks

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5. Know when to Use a Limit or Market Order 

Market Order

A “Market Order” refers to an order made by an investor through an appointed broker to trade investment stocks immediately at a reasonable price. A market order is not restricted and can therefore be executed quickly. In instances where the stock market is moving at a fast pace and investment yields are being threatened, a market order is the best option for selling stocks. Nonetheless, investors should take precautions when utilizing a market order to secure profits.

Limit Orders 

A limit order is an order used by investors to appoint a specific price to stocks through brokerage. It defers from a market order in the sense that execution is not guaranteed if the price of the stock cannot be met by buyers while the order is open. A limit order is ideal when selling stocks that have decreased in value. The investor can select a price that is lower than the current trading price and wait for the stock to descend for an opportunity to make sale. 

The Bottom Line

Knowing when and how to sell stock can significantly affect returns on an investment.

In cases where a sale did not turn out to be as profitable as anticipated, the investor will become more aware of understanding what went wrong during the transaction process.

However, to avoid any negative experiences investors should conduct a comprehensive analysis of the stock market climate while recording all valuations and prices before making a sale on stock. 

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