If you're new to buying and selling stocks, it is important to understand not only the risks of these transactions but also the costs involved with completing them. Selling stock may net you a profit but you must also factor in any servicing fees charged by the broker.
When you sell stock you make it available for purchase on the market. It is similar to putting an item of value up for sale on an online auction, only the price is dictated by stock market movements. A broker facilitates the transaction. To sell the stock, he either puts it up for sale on a stock exchange or electronic trading system. Another option is to sell it to a market maker firm that buys the stock at the current market price.
Do Brokers Charge for This?
Brokers charge whether you buy or sell stock on the stock market, just as is the case with an online auction. If you sell something as a result of an auction, you must pay a commission fee to the auction website for facilitating the transaction. The broker requires a fee for the service of completing your request. The fee may be a flat rate or based on the volume or size of your trades.
Online trading systems have streamlined the process of selling stocks. In the past, you had to go to a broker's office with stock certificates to initiate this type of request. Now in a few clicks you can sell your stocks through an Internet-based brokerage. When you trade stocks online instead of going to a broker's office you commonly pay less for the service.
Some new traders make uninformed decisions to sell stock either too soon or too late due to poor research or lack of education on how the stock market works. Portfolio manager Pat McKeough advises on the website MoneyVille, "Don't sell your top-quality stocks just because they've gone up." Other experts advise you to sell when the time comes that you have a better place to put your money. So if you're new to stock selling and buying, consult an experienced and trusted financial adviser. Read recent editions of books on stock trading and attend reputable trading seminars that come to your area. Listen to a wide variety of opinions from experts.