Selling Stocks On Robinhood: A Quick Guide

by Jhon Lennon 43 views

Hey guys! So, you're looking to sell some stocks on Robinhood? No sweat! It's actually a pretty straightforward process. Robinhood has made it super easy for anyone to buy and sell stocks right from their phones. Whether you're taking profits, cutting losses, or rebalancing your portfolio, this guide will walk you through each step. We'll cover everything from locating your stock to placing the order, and even some tips to keep in mind along the way. Let's dive in!

Step-by-Step Guide to Selling Your Stocks

Alright, let's get down to the nitty-gritty. Selling stocks on Robinhood involves a few simple steps. First, you need to find the stock you want to sell. Then, you'll enter the details of your sell order. Finally, you'll review and submit the order. Here’s a detailed breakdown:

1. Locate the Stock

First things first, you need to find the stock you want to sell within the Robinhood app.

  • Open the App: Start by opening the Robinhood app on your phone. Make sure you're logged in.
  • Navigate to Your Portfolio: Tap the "Account" icon, which usually looks like a person or your profile picture, located at the bottom right corner of the screen. This will take you to your portfolio overview.
  • Find the Stock: Scroll through your investments until you find the specific stock you want to sell. You can also use the search bar at the top to quickly locate the stock by its ticker symbol or company name. For example, if you want to sell Apple stock, search for "AAPL".
  • Tap on the Stock: Once you've found the stock, tap on it to view its details. This will bring you to a page with information about the stock's current price, your holding, and other relevant data. Make sure you're on the right stock before proceeding!

2. Initiate the Sell Order

Now that you've found the stock, it's time to initiate the sell order. This involves specifying how many shares you want to sell and at what price.

  • Tap the "Trade" Button: On the stock's detail page, you'll see a "Trade" button. Tap it to proceed.
  • Select "Sell": A menu will pop up with options like "Buy" and "Sell". Choose "Sell" to indicate that you want to sell your shares.
  • Enter the Number of Shares: You'll now be prompted to enter the number of shares you want to sell. You can either type in the specific number or use the "%" buttons to sell a percentage of your holdings (e.g., 25%, 50%, 75%, or 100%). Be careful when selecting the percentage, especially if you intend to keep some shares.
  • Choose Order Type: Robinhood offers different types of orders, including:
    • Market Order: This order executes immediately at the current market price. It's the simplest and fastest way to sell your stock.
    • Limit Order: This order allows you to set a minimum price at which you're willing to sell. The order will only execute if the stock price reaches or exceeds your specified price. This can be useful if you want to ensure you're selling at a certain price point.
    • Stop Order: This order becomes a market order once the stock price reaches a specific "stop price". It's often used to limit potential losses.
    • Stop Limit Order: This is a combination of a stop order and a limit order. The order becomes a limit order once the stock price reaches the stop price. For most people, a market order is the easiest option, but if you have specific price targets, a limit order might be better. To select the order type, tap on "Market Order" (or whatever the default is) and choose the type you want.
  • Set Your Price (if applicable): If you choose a limit order or stop-limit order, you'll need to set the price at which you want to sell. Enter the price in the provided field. Make sure the price is reasonable and achievable based on the current market conditions.

3. Review and Submit the Order

Before you finalize the sale, it's crucial to review all the details of your order to ensure everything is correct.

  • Review the Order: Robinhood will present you with a summary of your order, including the stock, number of shares, order type, and estimated proceeds. Double-check all the information to avoid mistakes.
  • Swipe Up to Submit: If everything looks good, swipe up from the bottom of the screen to submit your order. This action confirms that you want to proceed with the sale.
  • Confirmation: After submitting the order, you'll see a confirmation message indicating that your order has been placed. If you used a market order, the sale will typically execute within seconds. For limit orders or stop-limit orders, the order will remain pending until the stock price reaches your specified price.

4. Check Your Order Status

After placing your sell order, you can check its status to see if it has been executed.

  • Navigate to Your Account: Tap the "Account" icon at the bottom right corner of the app.
  • Select "History": In your account overview, find and tap on "History". This will show you a list of your past and pending transactions.
  • Find Your Order: Scroll through the list to find the sell order you just placed. The status will indicate whether it's "Pending" (for limit orders or stop-limit orders) or "Filled" (meaning the order has been executed).
  • View Details: Tap on the order to view more details, such as the execution price and time.

Important Considerations Before Selling

Before you hit that sell button, there are a few things you should keep in mind. Selling stocks isn't just about clicking a button; it's about making informed decisions. Let's cover some key considerations to help you sell smarter.

Tax Implications

First up, let's talk taxes. Uncle Sam always wants his cut, right? When you sell stocks, the profits you make are generally subject to capital gains taxes. The rate you pay depends on how long you've held the stock:

  • Short-Term Capital Gains: If you held the stock for less than a year, any profit is taxed at your ordinary income tax rate. This can be a significant chunk, so be aware.
  • Long-Term Capital Gains: If you held the stock for more than a year, you'll likely pay a lower long-term capital gains tax rate, which is generally more favorable. These rates can be 0%, 15%, or 20%, depending on your income level.

Keep meticulous records of your stock purchases and sales. This will make tax time much easier. Robinhood provides records of your transactions, but it's always good to keep your own as well. When you sell at a loss, you can use that loss to offset other capital gains, which can reduce your overall tax liability. It's not all bad news!

Market Conditions

Pay attention to what's happening in the market. Is there a broad market downturn? Are there specific news events affecting the stock you want to sell? Selling during a panic can often lead to selling at a lower price than you might otherwise get. Try to stay calm and rational. Easier said than done, I know!

Investment Strategy

Consider how selling this stock fits into your overall investment strategy. Are you rebalancing your portfolio? Are you cutting losses on a stock that's underperforming? Or are you just trying to time the market? (Spoiler: that's usually a bad idea). Make sure your selling decisions align with your long-term goals.

Fees and Commissions

One of the great things about Robinhood is that it doesn't charge commissions for buying or selling stocks. That's right, it's free! However, be aware of other potential fees, such as regulatory fees, which are usually very small but can add up over time. Always check the fee structure to avoid surprises.

Advanced Selling Strategies

Ready to level up your selling game? Here are some advanced strategies to consider. These aren't for everyone, but if you're an experienced investor, they might be worth exploring.

Tax-Loss Harvesting

Tax-loss harvesting involves selling stocks at a loss to offset capital gains. This can be a smart way to reduce your tax bill. Here's how it works:

  • Identify Stocks at a Loss: Look through your portfolio for stocks that have decreased in value since you bought them.
  • Sell the Losing Stocks: Sell those stocks to realize the capital loss.
  • Offset Capital Gains: Use the capital loss to offset any capital gains you've realized during the year. This can lower your overall tax liability.
  • Beware the Wash-Sale Rule: The wash-sale rule prevents you from immediately buying back the same or a substantially similar stock within 30 days of selling it at a loss. If you do, you can't claim the loss for tax purposes. The IRS is watching!

Using Stop-Loss Orders

A stop-loss order is an order to sell a stock when it reaches a specific price. This can help you limit your losses if a stock starts to decline.

  • Set a Stop Price: Determine the price at which you want to sell the stock if it starts to fall. This should be a price that you're comfortable with, based on your risk tolerance.
  • Place the Stop-Loss Order: Enter the stop price when you place your sell order. Robinhood will automatically sell the stock if it reaches that price.
  • Monitor Your Stocks: Keep an eye on your stocks to make sure the stop-loss price is still appropriate. You may need to adjust it as the stock price changes.

Selling Covered Calls

Selling covered calls is a strategy where you sell call options on stocks you already own. This can generate income from your holdings, but it also limits your potential upside.

  • Own the Stock: You need to own at least 100 shares of the stock for each call option you want to sell.
  • Sell Call Options: Sell call options with a strike price above the current market price of the stock. This gives the buyer the right to purchase your shares at that price.
  • Earn Premium Income: You'll receive a premium for selling the call options. This is income you get to keep, regardless of whether the option is exercised.
  • Potential Upside Limited: If the stock price rises above the strike price, the option will likely be exercised, and you'll have to sell your shares at the strike price. This limits your potential profit.

Common Mistakes to Avoid

Nobody's perfect, and we all make mistakes. But when it comes to selling stocks, some mistakes can be costly. Here are a few common pitfalls to avoid.

Selling Based on Emotion

Don't let your emotions drive your investment decisions. Fear and greed can lead to bad choices. Avoid selling in a panic during market downturns, and don't get too greedy when a stock is soaring. Stick to your investment strategy and make rational decisions.

Not Understanding the Order Types

Using the wrong order type can have unintended consequences. Make sure you understand the difference between market orders, limit orders, and stop orders, and choose the one that's right for your situation.

Ignoring Tax Implications

Taxes can take a big bite out of your profits. Don't ignore the tax implications of selling stocks. Keep track of your gains and losses, and consider strategies like tax-loss harvesting to minimize your tax bill.

Not Reviewing Your Order

Always double-check your order before you submit it. Make sure you're selling the right stock, the right number of shares, and at the right price. A simple mistake can be costly.

Final Thoughts

Selling stocks on Robinhood is a straightforward process, but it's important to do it thoughtfully and strategically. Keep these tips in mind, and you'll be well on your way to making informed selling decisions. Happy investing, and may the market be ever in your favor!