Since Google likes the easy answers to complex questions, more often than not, you can see comprehensive guides on selling stocks with steps like “find a broker,” “register,” and “press the button.” We don’t do that here because selling an asset is a serious decision, and it requires a lot of preparation and analysis. We won’t focus on technicalities here either. Instead, you’ll find a guide on what decisions you should make before selling your stock and what consequences they will have in the future.
Another thing that’s going to be left out here is when to sell stock. It’s a complex matter that deserves a separate article, and luckily, JustForex has one for you right now! So if you want to know when to sell stocks – check it out.
Things to consider before selling stock
Selling stock shouldn’t be an impulsive decision because stocks tend to increase in value over time. That’s why we have a list of several questions you need to ask yourself before you make a sale.
Are you trading or Investing?
The question’s quite simple and won’t take much time to answer. If you’ve invested in stocks sometime in the past and now have reached your target profits – you sell. On the other hand, if you’re a trader – the only thing to consider is whether selling your shares now falls in line with your trading strategy.
Why are you selling stock?
There could be many answers to that, and each of them might lead to a different outcome. For example, if you sell because of a personal situation and need money right now – no analysis will help you. What you should do is determine a timeframe for sale and pick the correct sell order for your purposes.
If you’ve reached your target profits and decided that it’s time to lock them – you might want to look for the most profitable way to sell without hurrying.
If the shares are losing their value and it all might come to the stop-loss scenario being triggered – you need to analyze the company’s situation and prospects to figure out whether it’s better to hold on and sell later when the price goes up.
Which sell order should you pick?
Firstly, not all market orders or contingencies are equally helpful. If we count out the ones used for professional trading, there’s going to be only two left: market sell order and limit sell order.
Market sell order means that you’re willing to sell your stock as soon as possible and will accept the lowest price on the market. Its advantage is that such orders can be executed in minutes or even seconds, which is undoubtedly good for you if time is important. The downside of them is that in some cases, the lowest price on the market at the time of sale gets way lower than you expected while putting an order.
A limit sell order will come in handy if you’re an investor and decided to lock your profits. No rush, no tight deadlines, just you and your investment that’s grown big enough to sell it. The order’s meaning is to sell your shares at a predetermined price regardless of how long it takes. Of course, such an order might take way longer to execute than the market one, but there are fewer chances of suffering losses due to random price fluctuations.
After you’ve answered these questions, the rest is simple. Find a reliable broker, deposit your stock, sell it, and walk away with your money. We hope that you’ll profit from your sale a little bit more after reading this than you would’ve without it.