Selling Stocks On Robinhood: A Simple Guide

Hey guys! So, you're thinking about selling some stocks on Robinhood? Whether you're taking profits, cutting losses, or rebalancing your portfolio, it's a pretty straightforward process. This guide will walk you through everything you need to know to sell your stocks on Robinhood like a pro. Let's dive in!

Understanding the Basics of Selling Stocks

Before we jump into the nitty-gritty of the Robinhood app, let's cover some essential basics about selling stocks. First and foremost, when you sell a stock, you're essentially converting your ownership in that company back into cash. The amount of cash you receive depends on the current market price of the stock, minus any fees (which, thankfully, Robinhood doesn't charge!).

Market Orders vs. Limit Orders: You'll encounter these two terms frequently. A market order tells Robinhood to sell your stock immediately at the best available price. This is the simplest and fastest way to sell. However, the price can fluctuate slightly between the time you place the order and when it's executed, especially for volatile stocks. On the other hand, a limit order allows you to specify the minimum price you're willing to sell your stock for. Robinhood will only sell your shares if the market price meets or exceeds your limit price. This gives you more control but might mean your order isn't filled if the market doesn't reach your price. It's crucial to understand the implications of each order type to make informed decisions.

Settlement Time: Keep in mind that when you sell a stock, the cash isn't immediately available in your account. This is due to the settlement process, which typically takes two business days (T+2). So, if you sell on Monday, the funds will be available on Wednesday. This is an industry-standard process and applies to most brokerage accounts.

Tax Implications: Selling stocks can have tax implications, so it's super important to keep track of your transactions. If you sell a stock for more than you bought it for, you'll realize a capital gain. If you hold the stock for more than a year, it's considered a long-term capital gain, which is typically taxed at a lower rate than short-term capital gains (held for a year or less). Conversely, if you sell a stock for less than you bought it for, you'll realize a capital loss, which can be used to offset capital gains or even reduce your taxable income up to a certain limit. Consult with a tax professional to understand how selling stocks will affect your specific tax situation. They can provide personalized advice based on your financial circumstances and help you optimize your tax strategy. Remember, I'm not a financial advisor, so this isn't financial advice. Always do your own research or consult with a professional.

Step-by-Step Guide to Selling Stocks on Robinhood

Alright, let's get into the actual steps of selling your stocks on Robinhood. It's super easy, I promise!

1. Open the Robinhood App and Find the Stock

First things first, fire up the Robinhood app on your phone. Once you're logged in, you'll see your portfolio overview. Scroll through your holdings until you find the stock you want to sell. Tap on the stock to go to its individual page. This page will show you the stock's current price, your position in the stock (how many shares you own), and various other details.

2. Tap the 'Trade' Button and Select 'Sell'

On the stock's page, you'll see a big, friendly 'Trade' button at the bottom of the screen. Tap it! A menu will pop up, giving you options to 'Buy' or 'Sell.' Since you want to sell, tap the 'Sell' button. This will take you to the order screen.

3. Enter the Number of Shares You Want to Sell

Now, you need to specify how many shares of the stock you want to sell. You can either enter the number of shares manually or tap the '%' button to sell a percentage of your holdings (e.g., 25%, 50%, 75%, or 100%). If you want to sell all your shares, simply tap '100%.' Double-check the number of shares to make sure it's correct before proceeding. Selling the wrong number of shares is a common mistake, so pay close attention!

4. Choose Your Order Type: Market Order or Limit Order

This is where you decide how you want to execute your sale. As we discussed earlier, you have two main options: market order and limit order.

• Market Order: If you choose a market order, Robinhood will sell your shares immediately at the best available price. To place a market order, simply select 'Market Order' on the order screen. You'll see an estimated price based on the current market conditions. Keep in mind that this is just an estimate, and the actual price you receive may vary slightly.
• Limit Order: If you choose a limit order, you'll need to specify the minimum price you're willing to sell your shares for. To place a limit order, select 'Limit Order' on the order screen and enter your desired limit price. Robinhood will only sell your shares if the market price meets or exceeds your limit price. This gives you more control over the price you receive but might mean your order isn't filled if the market doesn't reach your price. Be realistic with your limit price; setting it too high might prevent your order from being executed.

5. Review Your Order and Submit

Before you finalize your sale, take a moment to review all the details on the order screen. Make sure the stock, number of shares, order type, and limit price (if applicable) are all correct. Once you're satisfied, swipe up on the bottom of the screen to submit your order. Robinhood will then execute your order based on your chosen order type.

6. Confirm and Track Your Order

After you submit your order, Robinhood will display a confirmation message. You can also track the status of your order in the 'History' section of the app. If you placed a market order, it should be executed almost immediately. If you placed a limit order, you'll need to wait for the market price to reach your limit price. You can cancel a limit order at any time before it's executed.

Tips for Selling Stocks Wisely on Robinhood

Selling stocks isn't just about clicking buttons; it's about making smart financial decisions. Here are a few tips to help you sell your stocks wisely on Robinhood:

• Have a Clear Strategy: Before you sell any stock, ask yourself why you're selling. Are you taking profits, cutting losses, or rebalancing your portfolio? Having a clear strategy will help you make rational decisions and avoid emotional trading. Emotional trading can lead to impulsive decisions that you might later regret.
• Consider the Tax Implications: As we discussed earlier, selling stocks can have tax implications. Before you sell, consider the potential tax consequences and how they might affect your overall financial situation. You might want to consult with a tax professional to optimize your tax strategy.
• Don't Try to Time the Market: Trying to time the market is a fool's errand. Nobody can consistently predict the future direction of the stock market. Instead of trying to time the market, focus on building a long-term investment strategy based on your financial goals and risk tolerance.
• Be Aware of Market Volatility: The stock market can be volatile, especially in the short term. Be prepared for price fluctuations and don't panic sell during market downturns. Panic selling can lock in losses and prevent you from participating in future market rebounds.
• Use Limit Orders Strategically: Limit orders can be a useful tool for controlling the price you receive when selling stocks. However, be strategic about setting your limit price. Setting it too high might prevent your order from being executed. Consider the stock's recent price history and volatility when setting your limit price.

Common Mistakes to Avoid When Selling Stocks on Robinhood

Even with a simple platform like Robinhood, it's easy to make mistakes. Here are some common pitfalls to watch out for:

• Selling the Wrong Stock: Double-check the stock ticker before you submit your order to make sure you're selling the correct stock. It's easy to accidentally select the wrong stock, especially if you have a lot of similar-sounding tickers in your portfolio.
• Selling the Wrong Number of Shares: Pay close attention to the number of shares you're selling. Accidentally selling too many or too few shares can throw off your portfolio allocation.
• Using the Wrong Order Type: Understand the difference between market orders and limit orders and choose the order type that's appropriate for your situation. Using the wrong order type can result in unexpected price executions.
• Ignoring the Tax Implications: Don't forget to consider the tax implications of selling stocks. Failing to account for taxes can lead to unpleasant surprises when you file your tax return.

Conclusion

Selling stocks on Robinhood is a pretty straightforward process, but it's important to understand the basics and avoid common mistakes. By following the steps outlined in this guide and considering the tips we've discussed, you can sell your stocks wisely and achieve your financial goals. Happy investing, and remember to always do your own research! Peace out!