Buying and selling stock is a complicated process, with a lot of paperwork and accounting. A stock is a share of ownership in a company. You can buy and sell as you want, if you own the stock, following basic trading rules. Actual transactions are performed through a stockbroker.
Holding Stock in Your Name
If a stock is in your name, you can sell it whenever you want. You just call your broker and instruct him to sell however many shares you own of a particular stock. If you do not have an account with a brokerage house, you will have to supply the actual stock certificates. Most brokerages hold stocks in an investor account, rather than supply the physical certificates. Many brokers today offer online order processing to speed handling.
Selling at the Market
Enter a "market" order with a broker to sell quickly. "Buy" and "Sell" orders are matched either through an exchange or trading system and your broker will sell your stock at the best price he can get. That may be more or less than you paid. If your stock closed or ended the previous trading day at $40 and you enter a market sell, you probably will get about $40 a share.
Sell With a Stop
You can sell with a "Stop" order, which allows you to sell automatically if a stock falls to a certain price. You designate the sale price. Say you're afraid your $40 may be dropping in value and you don't want to lose too much money. You enter a "Stop" order to sell when the price hits $38, for instance, and it will be sold if it drops to that price. If it never drops that low, your stock won't sell.
Set a Sell Limit
You also can enter a "Limit" order, to sell at a predetermined price. If you think your $40 stock is heading up, you can enter an order to sell a $42, to take a profit of $2 a share. If the stock hits that price, it will be sold at that price (or a higher one if possible). If it never reaches that price, your stock won't be sold. You can leave a "Limit" order in almost indefinitely. You can enter a stop limit, too, to protect against a drop.
IRA or 401(k) Sale
If you hold stock through an individual retirement account or 401(k) retirement program, you'll have to sell it through that investment program and follow its rules. Most IRAs and 401(k)s limit stock selections, often to specific mutual funds, but some allow you to pick your own stocks or hold stocks in your company. In these cases, you can't sell directly but will have to work through the IRA or 401(k) investment program. A 401(k) is a retirement plan created by an employer which invests money to hold until retirement.
- Securities and Exchange Commission: Tips for Online Investing
- Market Watch: Getting Started: A Beginning Guide to Investing
- New York Stock Exchange: How a Stock Is Bought and Sold
- TurboTax: Employee Stock Purchase Plans
- TurboTax: Capital Gains and Losses
- Investors.com: Investing Basics: How To Sell A Stock
- Soler Investments: Sell Limit Order
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