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Selling Stocks on Robinhood

Selling stocks on Robinhood and cashing out the proceeds is a straightforward process that can be accomplished in a few easy steps. In this guide, we will explore how to navigate the Robinhood app to sell your stocks effectively and discuss the steps you need to take to withdraw your funds afterward.

Understanding Your Robinhood Account

Before diving into selling stocks, it's essential to understand how your Robinhood account works. Robinhood is a brokerage that allows you to buy and sell stocks and other securities. Your account comprises several sections:

  • Portfolio: Displays the stocks or securities you hold, their quantities, and their current market value.
  • Buying Power: Represents the available funds you can use to purchase stocks or options.
  • History: Contains all your past transactions, including stock purchases and sales.
  • Account: Shows your account’s financial summary and settings.

Knowing how each of these parts interconnect helps you better manage your investments and effectively sell stocks.

Steps to Sell Stocks on Robinhood

Step 1: Access Your Portfolio

  1. Open the Robinhood app on your smartphone.
  2. Log in with your credentials if necessary.
  3. Tap the "Account" icon at the bottom right corner of the screen.
  4. Select "Investing" or the portfolio section to display your current holdings.

Step 2: Select the Stock You Want to Sell

  1. In your portfolio, you'll see a list of stocks or securities you currently own.
  2. Tap on the stock you wish to sell, and this will take you to the stock's detail page.
  3. Here, you can review the stock's performance, including recent price actions, news, and other pertinent details.

Step 3: Initiate a Sell Order

  1. Once on the detail page for your chosen stock, tap the "Trade" button.
  2. Choose "Sell" from the menu that appears.
  3. Enter the number of shares you want to sell. You can opt to sell all your shares or a portion, depending on your strategy.
  4. At this stage, consider any open market orders you might currently have. Robinhood allows you to schedule orders based on types:
    • Market Order: Executes immediately at the current market price.
    • Limit Order: Executes only when the stock hits a specified price.
    • Stop Order: Becomes a market order when the stock hits the stop price.
    • Stop Limit Order: Becomes a limit order when the stock hits the stop price, but only fills at the limit price or better.

Understanding order types enables you to choose the strategy that best suits your investing goals.

Step 4: Review and Confirm Your Order

  1. Carefully review the order details to ensure accuracy, as mistakes can be costly.
  2. Confirm the order, and Robinhood will process your request to sell the shares.
  3. You'll receive a notification once your order has been executed ― this could be instant for market orders or could take time for limit or stop orders.

Cashing Out: Withdrawing Funds

Once you've successfully sold your stocks and funds have settled into your account, you may wish to withdraw them. Here's how to proceed:

Step 1: Wait for Settlement

Funds from the sale of stocks take a few days to settle. Robinhood follows a T+2 settlement period, meaning your funds will be available for withdrawal two business days after selling your stocks.

Step 2: Access Your Account

  1. Open the Robinhood app and navigate to the "Account" section.
  2. Tap "Transfers" to proceed with initiating a funds transfer.

Step 3: Initiate a Transfer to Your Bank Account

  1. Select "Transfer to Your Bank."
  2. Choose the bank account where you wish to deposit funds. If you haven’t linked a bank account yet, follow the prompts to do so.
  3. Enter the amount you wish to transfer. You can transfer all the available cash or a specific amount.
  4. Review the transaction details and confirm the transfer.

After confirming, the withdrawal process from Robinhood typically takes 1-3 business days for the funds to appear in your bank account, depending on your bank's policies and timescales.

Key Considerations and Best Practices

Understanding Tax Implications

  • When selling stocks, remember that profit from sales may be subject to capital gains tax.
  • Short-term capital gains apply if you held the stock for less than a year; these are typically taxed at a higher rate than long-term gains.
  • Long-term capital gains occur when the stock is held for over a year and may benefit from a lower tax rate.

Avoiding Frequent Trading Violations

  • Robinhood, like other brokerages, enforces the Pattern Day Trader rule, which restricts smaller accounts from conducting more than four day trades over five business days.
  • Violating this rule may result in a trading restriction on your account.

Managing Risks

  • Investing in stocks remains a risk, and selling decisions should align with your financial strategy and market research.
  • Consider consulting with a financial advisor if unsure about your investment decisions.

FAQs

Can I sell stocks outside market hours?

Robinhood supports extended-hours trading, allowing stock sales before and after standard market hours. However, liquidity and prices may vary, leading to different execution outcomes.

What happens if I change my mind about a sell order?

If your stock sale order hasn’t executed, you can cancel it in the app. Go to the "Order History" section and find the pending order to cancel it.

What fees are associated with selling stocks on Robinhood?

Robinhood is generally commission-free, but fees may apply under specific conditions, such as option trades. Always check for updates in the app or on their website.

Why can’t I withdraw my funds immediately after selling stocks?

Due to T+2 settlement periods, ensure funds are fully settled in your account before attempting withdrawals. Unsettled funds cannot be moved until the settlement completes.

Selling stocks and cashing out on Robinhood is designed to be user-friendly for investors of all levels. By understanding the whole process, you can make informed decisions that align with your overall investment goals. Happy investing, and remember to explore more investing insights available on our website for expanding your financial knowledge and strategy!