How to Sell Shares? The stock market is a significant part of the financial market. Buyers and sellers have traded it in the stock exchange to double their investments. Both public and private companies have their shares listed on the stock exchange. The next question that arises is what a stock exchange is?
Stock exchanges are the places where the shares are traded in bonds, equity shares and other securities. Every large and small company is listed on the stock exchange to trade professionally. Thus, being more liquid and investors prefer investing in these for secure trading in the financial markets.
The trading of stocks in the market first requires a purchase to sell them for a higher price. So, before jumping into selling shares, let’s understand how the shares are purchased?
Buying of Shares
The main lead to the purchase of shares is stock brokers. They are the intermediaries between the buyer and the company whose shares the investor wants to buy. After that, the buyers take the help of full-service brokers or online brokers. The full-service brokers are the traditional brokers that are personally involved with their clients. They try to know as much as they can about their client, their preferences, risk tolerance, etc. Once they have all the details, they guide the trader with a full financial plan in the long run. Aiding in every way possible, these are good for beginners of trade. But they are pretty expensive to trade with.
On the other hand, online brokers or discount brokers are just order takers. They take orders from the investor and work accordingly. They do not assist the trader or map out a long term financial plan but trade on behalf of the investor. Being less expensive in comparison to full-service brokers is what attracts investors to them. With a minimum deposit online, the trader can create an account with online brokers and start trading immediately.
However, both the options have their advantages and disadvantages, and it depends upon the investor what suits them better to trade with.
Selling of Shares
Once a trader holds shares, they have to look for opportunities in the market and sell them to earn. The shares could be sold and transferred to a buyer through a stock exchange or direct sale as per the traders choice.
The brokers assist the traders in selling their shares in the stock market with brokerage fees. First, the legal ownership of the shares is transferred to another trader or buyer of the shares. The process takes a minimum of 2 business days to transfer the shares. Once the settlement is done, the trader shares are transferred, and its proceeds are deposited into the seller’s bank account.
The process of selling requires a trader to decide whether they want to be a trader or investor. This depends on the holding of shares and how long a trader or investor wants to be in the stock market business. Decide as per the need and then invest.
Next, they need to decide the way they want to execute their sale. Be it through a full-time broker or an online broker. Online brokers are more accessible and easy to trade with, and full-time brokers are convenient for a long term trade. So, trade must focus on these aspects before selling or buying shares.
The broker must be as per the traders’ needs and requirements. Day traders should consider a fast executor of a trade broker. If a beginner of the trading market, go for a broker that offers educational material and resources to make the novice a professional.
Lastly, sell the shares in the trading market with the help of the broker.
Reasons for Selling of Shares
Various reasons make an owner sell the shares of the company. We have discussed in this the main motives of selling of shares:
- Shares generate cash and thus makes them highly liquid.
- A good source of debt payment and other liabilities.
- The shares are sold in the market to expand the business and have profits.
- It reduces the risk of the owner.
- A provenance of diversification of the personal assets of the owner.
- Aid for tax payments
- Reason for not expanding the business further as well
- For an eventual succession of the ownership
- A profitable trade
Things to consider before selling shares
The huge stock market needs to be well-versed with, and some primary points should be considered before selling shares. As it is carried out via a stockbroker or online trading platforms, decisions should be made with knowledge and understanding. The trade of capital or funds is difficult if not acknowledged in advance.
Some traders sell to purchase other equity shares in the market further. For these, we must look into the points earnestly.
Trader or Investor
The traders should first decide the time period for which they want to trade in the stock market. This would determine if they are traders or investors of the market. Both the traders and investors have different motives for trading in the stock market. The day traders have a different time frame of trading than an investor. Investors trade in the market for the long run and enjoy the perks of the same. The investment must be as per the strategy of the trader or the investor.
Sell of Stocks
The second point is the sale of stock and the reason for selling it. Such decisions should not be taken due to a loss incurred or emotional turmoil. Buying and selling both should have a proper reason and as per the analysis of the market. The market should be researched well before selling off the stocks. Profits and losses both must be taken into account.
In a short term trade position, the trader buy and sell shares in a short time span to have quick profits. An active strategy will guide a trader in uncertain situations of the market. For example, if the market indicates a loss in future, then also the trader might sell a security in the market.
The company whose shares are purchased is also the reason for share purchase and sell. If the company’s position is going higher in the market with its news and presence in the market, then shares should be held or sold. The dividends and profits that the company offers are also important.
So, all these factors are necessary and impact trade to sell shares.
Sell Order Types
Sell orders are in line with the stock market and work accordingly. There are different types of sell orders to purchase and sell shares. They help in maximising the sale of shares.
Market Sell Order: It is the order that helps the trader to sell the shares at the current best available price of the market. This ensures proper execution of the trade with the sell order. They get filled at near the buying price. As a result, the price would differ from the last buy or sell price of the shares in the market.
Limit Sell Order: The shares are sold at a specified price or a much better price in this order type.
Stop-Loss Sell Order: It is the price that is set by the trader using a trading tool. A factor that would make a great difference in the trade. An order is placed with the broker to sell the shares at a certain price. This prevents the traders from facing loss and secures their trade. It benefits the trader and has no extra charge. The broker only takes a regular commission for selling the shares at stop-loss order—a kind of free insurance policy for the traders.
Trailing Sell Stop Order: It is used for both loss and profit protection of the trader. In the long run, trailing sell stop orders is an effective strategy the traders can use and earn profits. Similar to stop order, the strategy has automatic price movements as per the parameters the trader specifies. Thus, traders have reasonable prices to sell shares.
Trade contingencies are profitable for selling for shares. The traders can take advantage of these and buy and sell shares. Below listed are the contingencies:
All or none: AON is a contingency that specifies that the trade order must be filled, and no partial execution is allowed in AON.
Immediate or Cancel: IOC is for immediate order or cancellation of the order. Immediate execution of the order takes place in this facility of partial execution.
Fill or Kill ( FOK): It is a combination of AON and IOC, where the order is filled immediately or cancelled.
Day order: The Limit and stop order requires specification of its trade time; otherwise, it is termed a day trade order.
Good ’til cancelled ( GTC): A valid order until cancelled or executed by the trader. It does not consider the time of day it was placed.
Market on close ( MOC): An order held by a broker throughout the day, and if the market fails to reach the specified level, it is an order to be executed at market close.
Market on open ( MOO): The market order used to buy and sell shares on the opening bell.
Selling Short or Buying Put Options
The traders of the market prefer various functions to sell the shares. Selling Short and Put Options are the methods the trader can use to sell shares.
Selling short means to sell the shares in a short time. The trader first borrows the shares, sells them in the market, and then repurchases them at less value to earn profits. A short-selling process where the trader does not own the shares and still enjoys the benefits.
Buying put options is a method of selling the shares in the market with a put option. The put option is a derivative that gives the buyer a right to sell the security further. It is sold at a specified price known as the strike price.
These are the best ways to sell shares.
How to Sell shares online?
For the online selling of shares, the trader needs brokers. The brokers provide traders with all the facilities to buy and sell the shares and enjoy profits easily. The steps of trading online are discussed here:
Choose a Broker: The trader should pick a broker who has been in the field for quite some time and knows about the trading. Brokers should be verified and properly authorised to conduct online trade. So, the license and registration should be considered. The brokers help the trader to sell online the shares or transfer them at the correct time. How and where the stocks are sold is a significant part of the process. The best and reputed broker should be the priority for online trade. The suitable brokers lead the traders to a profitable journey of trading. Some of the best brokers I would recommend are TradeATF and ETFinance.
Trading Platforms: Once the broker is decided, the platforms that it provides online should be known. The trader must use the trading platform to be able to forecast the trade and invest. Trading tools help in the analysis of the market with the fundamental and technical aspects. The trader can use these for expert advice, time frames, calculations, charts, and other features. MetaTrader4 is the most popular and user-friendly platform in the trading world.
Deposits in the account: The trader can then deposit the amount in the online trading account with the help of bank wire transfers, debit or credit cards or other online payment methods. This would be the start of the trade with funds to invest and earn from the same. The trader should also consider the minimum deposit that the broker requires to begin the trade.
Sell of shares: The shares are purchased first by the trader or borrowed in other options of trade using selling short or put options. The sell orders are set in the trading account with the use of the trading platforms. As per the need, the trader can enter the market every day to purchase and sell shares.
Options for How To Sell Shares
The trader can sell their shares in different ways, below mentioned are the ways:
Going Public: The first option that a trader can consider is to sell shares in the UK or any other country. However, big businesses or companies prefer less of this option as it is expensive. Being costly, public share selling involves lots of legal formalities, which makes it quite hectic. Still, it is used due to its capability to raise large amounts of funds. Thus, increasing the value of the company in the market.
Large private investors: The private institutions are easily accessible, fast and cheap to trade with. The companies have limits to deal with these. It is also a good way to expand the business and earn profits.
Small investors: Selling shares with private companies has its difficulties. However, it is easier than the large private companies. Traders can easily choose from these and invest with them. Though they have less money, still they can be an excellent choice to invest with and sell shares.
Selling to employees: A business trader can sell his shares to his employees as well. So the employees being a part of the business can be interested in holding some position. It also benefits loyal investors, and these could be provided in the form of bonuses or awards to the employees. Though not a practical option for raising capital through employees.
With all the above-stated categories, the best is to be confident with the trade one invests in. Trading with complete research and analysis would hardly make the trader face losses. However, trading is an environment that needs practice and learning at all levels. The trader should purchase and sell the assets or shares, keep basics in mind and have confidence. The only way to be successful in trade is by predicting the future of the shares with trading tools and the sale of shares or securities correctly and adequately. These all steps would benefit a trader in the long and short run. So, be confident about the decision taken and play safe.
The stock market is worth trillions of dollars, and to trade with such a market, one needs lots of knowledge and guts. Selling shares is not at all difficult if the trader has an understanding of the market. The buying and selling in the stock market could be done with a mindset. The long and short term positions should be decided, sell shares orders should be used, and the strategy used in the process should be followed and changed only if a situation demands. The trade is all based upon the strategy and how the trader carries it out. So, being confident with proper online and offline understanding is the primary requirement for any purchase or sale.