Selling Shares: A How-To Guide

Daily Stock Market Update: US and Asian Shares Cheer Oil Gains - Feb 4, 2016

We are all aware that the main intention of investing is to turn a profit within a set period of time. Although choosing the underlying asset, the market and the trading platform are all crucial metrics, the physical sale of these holdings is just as critical. Not only must this execution be transparent in terms of mechanics, but commissions and fees should also be well understood in advance. So, how can you apply these factors to a sale and what are some additional variables that should be taken into account well in advance? Let us take a closer look.

Execution-Only Methods

Those who tend to be more sophisticated investors may neither desire nor require any advice prior to a share sale. In this case, they will often opt for what is known as an execution-only service. This generally requires no prior registration with the online brokerage. Although the process could differ slightly from provider to provider, the main step is to complete a share sales form. Basic information includes one’s name, address, and proof of identity. An agreement will then be signed which states that this information is valid. The form will then be physically mailed to the provider although it is now very common to scan and send all documentation via email to the broker directly.

Market Price Versus Limit Price

This is often the most important concern to the investor, as these two prices can dramatically differ in some cases. This could be particularly relevant when dealing with certain sectors such as the Forex markets or binary trades. The differences between the two are:

  • The market price is the current value of the shares (upon execution of the sale).
  • The limit price is the LOWEST value that the trader will accept for these shares.

Should one be confident that the value of these holdings will continue to increase, selecting the market price may be the best option. Selecting the limit price is a more conservative choice and while profit margins might not be as high, the chances of entering into a profitable position are increased. 

Concerns in Regards to the Sale Provider

A share sale will only be as efficient as the provider in question. It is therefore pivotal that the reputation of the company be closely examined. Only firms which are able to boast a solid history and that are recognised by the relevant governing bodies should be chosen. Remunerations and additional benefits that will be received by the firm must likewise be understood, as these naturally affect the profit margins of the investor. Most astute traders select CMC Markets for these purposes, as quality and discretion are guaranteed. The end result will be a quick share sale that can offer the possibility of enjoying a handsome profit within a relatively short period of time.

Whether approached from a short- or long-term point of view, the sale of one’s assets is the ultimate goal of any investor. Please feel free to refer back to this guide or to contact CMC Markets directly to answer any additional questions