When you sell a stock who buys it
You can set up an account by depositing cash or stocks in a brokerage account. If you prefer buying and selling stocks online, you can use sites like E-Trade or Ameritrade. Those are just two of the most well-known electronic brokerages, but many large firms have online options as well. The broker executes the trade on the your behalf. In turn, he or she earns a commission, normally several cents per share. Online trading sites typically charge lower commission fees, because most of the trading is done electronically.
What Happens When You Buy or Sell Stocks
Our podcasting duet learned something last month: Having Ross Anderson, certified financial planner from Motley Fool Wealth Management -- a sister company of The Motley Fool -- along for the ride makes it so much easier. In this segment, they get down to some fundamental ideas that underpin modern markets, including a big one: liquidity. Every transaction needs a buyer and a seller. You'll almost never know who's on the other side, but that doesn't matter.
What does is that there is someone, because when there's not, your purchase or sale stalls out. That's where "market makers" come in. Alison Southwick: The next question comes to us from Amar. When I sell a stock, who is buying it? How come there's always a buyer when I want to sell? The ticker is NWS. I'm not recommending it, but I just wanted to see how much it actually trades.
The average volume over the last 10 days has been , shares a day. So, there's a lot of people trading a lot of stocks. It is possible that if you got into a thinly traded stock or what's sometimes called a pink sheet [which is an over-the-counter traded stock that is not on an exchange], that you could have an order sit out there that doesn't get filled, either to buy or to sell. You could try and buy a stock and not have that availability there. But for anything that is really a household name or trades on a U.
And really, that is the supply and demand curve being expressed in real time that if nobody's willing to buy it at today's price or the current moment's price, it will continue to drift down until somebody is willing to buy it. That's really what you're seeing with daily price fluctuations, and there's a lot of people out there.
Brokamp: And for the really big names, there are people whose jobs it is, essentially, to buy stocks when someone is selling or to do the opposite, and they're the people you see on the trading floors.
They're specialists. It's their job to make a market in the biggest-name stocks. As Ross said, with the smaller ones there's no one out there [who has] that job, so you just have to hope you do it. But there are plenty of people out there who make their living buying from you and selling to another person, basically in a split second, and getting a little bit of a commission along the way.
Anderson: One of the traders for Motley Fool Wealth Management -- we have three traders that implement our strategy -- used to be a market maker. He basically sat there all day watching orders come in and go out and taking a tiny haircut on those transactions.
I chatted with him about this before the podcast, and he said there's a lot less of that going on than there used to be. I think the electronics has changed it, but it's certainly fascinating how fast and how much of that goes on.
And orange juice futures. And screaming. But when we went and rang the bell for The Motley Fool four or five years ago, it's just a bunch of guys standing around computers. Like half of them look like they just drink coffee and eat sandwiches all day and don't really do that much else. It's not a lot of yelling and waving pieces of paper in the air. Anderson: A lot of that really exists today for the TV environment.
They shoot a lot of TV on the floor of the exchange wanting it to look like it's where the action is happening, but it's not that necessary anymore. Apr 7, at PM. Stock Advisor launched in February of Join Stock Advisor.
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Most stocks are traded on physical or virtual exchanges such as The New York Stock Exchange What Happens When You Buy or Sell Stocks. Institutions, market specialists or makers, corporate traders or individual traders may buy your stocks when you sell them. Why Are You Selling Stocks? You might.
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Getting it right can be key to claiming your profits — or, in some cases, cutting your losses. Bad reasons typically involve a knee-jerk reaction to short-term market fluctuations or one-off company news. Bailing when things get rocky only locks in your losses, which is the opposite of what you want.
If Everyone Is Selling, Does Your Broker Have to Buy Your Shares From You?
Most stocks are traded on physical or virtual exchanges. The New York Stock Exchange NYSE , for example, is a physical exchange where some trades are placed manually on a trading floor —yet, other trading activity is conducted electronically. When a bid and an ask match, a transaction occurs and both orders will be filled. In a very liquid market , the orders will be filled almost instantaneously. In a thinly traded market, however, the order may not be filled quickly or at all. The specialist facilitates the trading of a given stock and maintains a fair and orderly market.
When I Sell Stock, Who's Buying It?
If you want your order processed as quickly as possible and will take whatever price the market gives you, then you can enter your transaction as a market order. Pending orders for a stock during the trading day get arranged by price. The best ask price—which would be the highest price—sits on the top of that column, while the lowest price, the bid price, sits on the bottom of that column. As orders come in, they are filled at these best prices. If an order with a better bid price comes in, it goes to the top of the list. When a market order is received, it essentially cuts in line ahead of pending orders and gets the highest or lowest price available. When you submit a market order to buy a stock, you pay the highest price on the market. If you submit a market sell order, you receive the lowest price on the market. In most cases, you should avoid using market orders. Not only will you pay top dollar or sell for the bottom price, but you can also pay for a little mischief known as slippage.
It is rare that "everyone" is selling, as transactions only occur when there are buyers and sellers. However, it can seem like "everyone" is selling when stocks are in a period of decline.
Our podcasting duet learned something last month: Having Ross Anderson, certified financial planner from Motley Fool Wealth Management -- a sister company of The Motley Fool -- along for the ride makes it so much easier. In this segment, they get down to some fundamental ideas that underpin modern markets, including a big one: liquidity. Every transaction needs a buyer and a seller.
How Does the Stock Market Work When You Sell?
Most stock investing discussions center around which stocks to buy. Hot stock picks, when to buy, and what's your growth strategy. Selling is often an afterthought, or a topic for experienced investors. But if you are buying stocks, chances are that you will sell someday, and becoming knowledgeable about the process will help you to be prepared when the time comes, whether tomorrow or in 30 years. The selling process is done with a fairly simple market sell order, which can be done through your online account or stockbroker. Theoretically, there is an actual buyer who will purchase these stocks, but for your concerns the trading house absorbs the sale and recompenses you at the current market price. There is a trading strategy known as "shorting," where an investor takes advantage of a high market price that she believes is likely to fall by selling borrowed shares of stock and then buying back the shares after the price decrease. In this situation, the deal is far from done at the sale, and the investor carefully monitors the market to know when to execute the buyback. The decision as to when to make the sale will be largely based on the return on investment. There are two reasons you would sell your stock: either the price has risen enough and you would like to take out the profit, or the price has fallen and you want to cut your losses. Choosing exactly when to sell a stock is a precise art for the experienced investor.
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Advertiser Disclosure: The credit card and banking offers that appear on this site are from credit card companies and banks from which MoneyCrashers. This compensation may impact how and where products appear on this site, including, for example, the order in which they appear on category pages. Advertiser partners include American Express, Chase, U. Bank, and Barclaycard, among others. You bought some stock on a whim a few years go. Maybe it was doing great for a while, or maybe it has been yo-yoing. Maybe you are so sick of looking at the stock that you think it is time to sell. Before you pull the trigger on that sell order, there are a few things you should consider. Run down the 6 items on this checklist to see if you really should sell those shares of stock, or if you should consider holding onto them for a little while longer. You should decide before you purchase the shares of stock how much you would like to see the stock grow and how much you are willing to lose on the investment.
