How to sell stocks

To sell stocks, you log into your brokerage account, find the stock you own, enter the number of shares you want to sell, choose a price type (market order or limit order), and confirm the sale. The cash from the sale lands in your brokerage account within one to three business days, depending on your broker and the type of order. You can then withdraw that cash to your bank account or use it to buy other investments.

The actual mechanics take minutes. What takes longer is deciding whether to sell, at what price, and understanding the tax consequences of doing so. This guide walks through the process itself and the choices you face at each step.

Key Takeaways

  • A market order sells your shares at the current market price when ready, while a limit order waits until the price reaches the level you set.
  • The sale settles in one to three business days, meaning the cash appears in your account but you cannot withdraw it when ready.
  • Selling triggers a taxable event: you owe capital gains tax on the profit (or can claim a loss), and the tax rate depends on how long you held the stock.
  • Your broker reports the sale to the IRS on Form 8949, so you must report it on your tax return even if you do not receive a 1099 form.
  • Stocks held longer than one year may have access to for long-term capital gains rates, which are usually lower than short-term rates.

Market orders versus limit orders

When you place a sell order, you choose how the broker should execute it. A market order sells your shares at whatever price the market is offering right now. If you own 100 shares of a stock trading at $50, a market order sells all 100 shares at or near $50 per share. The sale happens almost when ready during market hours, but you do not control the exact price.

A limit order tells your broker to sell only if the price reaches the level you set. If you set a limit order to sell at $55 when the stock is currently $50, the broker waits. If the price climbs to $55, the sale executes. If the market closes without hitting $55, your order stays open (or expires, depending on how you set it). Limit orders give you price control but no may provide the sale will happen.

Market orders are faster and almost always fill. Limit orders protect you from selling at a price you did not want, but they can leave you holding the stock if the price never reaches your target. Most brokers let you set a time limit on how long the order stays active — typically one day, one week, or until you cancel it.

Settlement and when the cash is yours

After you sell, the stock exchange records the transaction, but the cash does not when ready appear in your account. This delay is called the settlement period. For stocks, settlement takes two business days (called T+2, meaning trade date plus two days). Some brokers offer same-day or next-day settlement for certain account types, but two business days is standard.

During the settlement period, the cash sits with the broker but you cannot withdraw it. You can see it in your account and use it to buy other stocks, but you cannot move it to your bank. Once settlement completes, the cash is fully yours and you can withdraw it whenever you want.

If you sell on a Friday, settlement occurs on Tuesday (skipping the weekend). If you sell on a Monday and Tuesday is a market holiday, settlement moves to Wednesday. Your broker's website shows the exact settlement date when you place the order.

Capital gains tax and holding periods

Selling a stock triggers a taxable event. You owe tax on the capital gain — the difference between what you paid for the stock and what you sold it for. If you bought 100 shares at $30 per share ($3,000 total) and sold them at $50 per share ($5,000 total), your gain is $2,000. If you sold at $25 per share ($2,500 total), you have a $500 loss.

The tax rate depends on how long you held the stock. Long-term capital gains explore if you held the stock for more than one year. Long-term rates are 0%, 15%, or 20% depending on your income level — usually lower than ordinary income tax rates. Short-term capital gains explore if you held the stock for one year or less. Short-term gains are taxed as ordinary income, at your regular tax bracket rate, which is typically higher.

You owe tax on the gain whether or not you reinvest the money. If you sell at a loss, you can use that loss to offset other gains or, in some cases, reduce your ordinary income by up to $3,000 per year (with unused losses carrying forward to future years).

How your broker reports the sale to the IRS

Your broker tracks every sale and reports it to the IRS on Form 8949 (Sales of Capital Assets). The form includes the stock name, the date you bought it, the date you sold it, the purchase price, the sale price, and the gain or loss. You receive a copy of this form (usually by January 31 of the following year) and must include it with your tax return.

You report the information from Form 8949 on Schedule D (Capital Gains and Losses), which is part of your Form 1040 tax return. Schedule D separates long-term and short-term gains and losses, calculates your net gain or loss, and shows how much tax you owe on the gain (or how much loss you can claim).

If you sold through multiple brokers, you receive a Form 8949 from each one. You must report all sales, even small ones. The IRS cross-checks your return against the forms your brokers file, so omitting a sale creates a mismatch that can trigger an audit notice.

Selling partial positions and tax-loss harvesting

You do not have to sell all your shares at once. If you own 500 shares, you can sell 100 and keep 400. This is useful if you want to lock in some gains or raise cash without exiting the position entirely. Your broker lets you choose the exact number of shares to sell in the order form.

If you own the same stock in multiple accounts or bought it at different times, you can choose which shares to sell. Tax-loss harvesting is a strategy where you sell shares at a loss to offset gains elsewhere in your portfolio. For example, if you have a $5,000 gain in Stock A and a $3,000 loss in Stock B, you can sell Stock B to reduce your net taxable gain to $2,000. Your broker's tax-lot selection tool lets you specify which purchase batch to sell so you can target the shares with the lowest cost basis (the highest loss).

One rule to watch: if you sell a stock at a loss and buy the same stock (or a substantially identical one) within 30 days before or after the sale, the wash-sale rule disallows the loss. The loss is deferred to the new purchase instead. This rule prevents you from claiming a loss and when ready rebuying the same investment.

Selling during market hours versus after hours

Stock markets are open Monday through Friday, 9:30 a.m. to 4:00 p.m. Eastern Time. If you place a market order during these hours, it executes at the current market price. If you place an order after 4:00 p.m. or on a weekend, most brokers hold it until the market opens the next trading day.

Some brokers offer after-hours trading, which lets you trade from 4:00 p.m. to 8:00 p.m. Eastern Time. After-hours prices can differ significantly from the closing price because fewer traders are active and bid-ask spreads widen. If you use after-hours trading, a market order may execute at a price far from what you expected. Limit orders are safer in after-hours sessions because they protect you from unexpected prices.

If you place an order after market close on Friday, it does not execute until Monday morning. The stock price can move significantly over the weekend, so the price you see Friday evening may not be the price you get Monday morning.

Frequently Asked Questions

What happens if I sell a stock and the price drops the next day?

Nothing happens to your sale — it is already complete and the cash is yours. You locked in the price you sold at. If the price drops after you sell, you avoided the loss. If it rises, you may regret selling, but the transaction cannot be reversed. This is why timing the market is difficult: you do not know what the price will do next.

Can I sell a stock I do not own yet?

In a regular brokerage account, no. You can only sell stocks you already own. In a margin account, you can borrow shares from your broker and sell them (called short selling), but you must repay the shares later and pay interest on the loan. Short selling is riskier and requires a margin account with a minimum balance.

Do I pay a commission when I sell?

Most major brokers (Fidelity, Charles Schwab, E-Trade, Vanguard) charge zero commission on stock sales. Some smaller brokers or international brokers may charge a flat fee or a percentage. Check your broker's fee schedule before you open an account. Even commission-free brokers may charge fees for certain services like wire transfers or margin interest.

What if I want to sell but the market is closed?

You can place an order anytime through your broker's website or app, but it will not execute until the market opens. If you place a market order after hours, it executes at the opening price the next trading day, which may be different from the price you saw when you placed the order. A limit order waits until your price is reached, even if that takes several days.

How do I know if my sale went through?

Your broker sends a confirmation email or notification within minutes of the sale. You can also log into your account and check your transaction history, which shows the exact price, number of shares, and timestamp. The confirmation includes the settlement date (usually two business days later). Once settlement completes, the cash appears in your account and you can withdraw it.