Table of contents:
- 1 Selling shares – how does it work?
- 2 Sell or hold shares? Secure profits and let it run
The choice of the time of entry can determine the success or failure of an entire investment. But not only the time of entry should be chosen carefully, also the time of sale should be well considered. If you sell too early, you may miss profits, if you hesitate too long, you may have to accept a loss of profits. In the following we will deal with the sale of shares and what you as a shareholder should consider.
Shares can be sold through brokers – on or off the stock exchange. Usually, a single sale of shares takes only a few minutes. The proceeds of the sale are credited to the settlement account on the next bank working day at the latest. Nevertheless, there are a few things to consider.
To be able to sell shares, a login to the securities account is required first. There, all securities in the portfolio are listed – including the number of shares, purchase price, name and ISIN (securities identification number, formerly WKN).
To sell a share, the order mask must be opened after logging into the custody account. There you must first specify the number of shares to be sold – e.g. 200 BMW preferred shares (BMW Vz.), ISIN DE0005190037.
The next step is to select the desired stock exchange – e.g. Xetra. Most brokers display all available stock exchanges in an overview. It is generally recommended to choose the trading place with the highest liquidity (daily turnover in the share to be sold).
A limit is then set. The limit ensures that the sale does not happen by an unfortunate coincidence at a very unfavourable price, which is very unlikely in the case of liquid shares such as the BMW preferred share, but theoretically possible. If shares are sold, the limit is set slightly below the current price. For example, if the BMW preferred share is quoted at € 75, a limit of € 74.50 can be set.
In the last step, the order is authorized by entering a TAN and forwarded to the exchange. As a rule, the shares are sold on the same day, the proceeds are credited to the clearing account and the transaction is noted on the securities account statements. Any income taxes arising from price gains are introduced directly by the broker if necessary.
In order to sell shares, there does not have to be any liquidity in the clearing account, as the transaction and, if applicable, limit fees are covered by the sale proceeds. It is not necessary to sell shares because a securities account is to be opened with another broker – a securities account transfer can be used for this purpose.
First of all, it is not possible to give a blanket answer to this question. How long you should hold your securities depends on several factors. These include, for example, your personal return expectations and the period during which you can spare the money invested. If you want to make quick profits, look for securities that are expected to rise significantly in the near future. This can be the case, for example, with young companies that are launching a promising innovation on the market.
If, on the other hand, you are looking for higher profits and can do without the invested money for a longer period of time, long-term stocks are a good choice. Those who have the opportunity to invest their own capital in the long term can cope better with price fluctuations than is the case with a short-term trader. A long-term investor usually only has to wait long enough for the next price increase and can even make a greater profit than with a quick sale.
Whichever investment period you choose, it is always important to know the market in which you want to invest. Business magazines and news are a good source of information, as are reputable online financial portals. You should also take a close look at the financial figures of a company you are interested in and look closely at historical share price movements.
It is not easy to find the perfect time to sell, and those who want to sell shares can never be completely sure that they have made the right decision. There is no guarantee of success in trading and even investors with years of experience are not always right with their trading decisions.
Should Icon watches sell or hold stocks in the current situation? The most important question for shareholders can never be answered in a general way. However, there are useful recommendations for action that can be taken into account the market situation and your own risk tolerance.
Should Icon watches sell or hold stocks in the current situation? The crucial question for shareholders can never be answered in a general way. However, there are useful recommendations for action that can be taken into account the market situation and your own risk tolerance.
Anyone who owns shares not only profits from the profits that can be generated by the increase in value but also, as a rule, from the dividends that stock corporations regularly pay out to their shareholders.
When is the best time to sell shares? A share should be sold when it no longer meets expectations or the criteria of the strategy applied. If a share was bought because of its high dividend yield and after three years it still offers a higher dividend yield than the securities of competitors, price gains alone are no reason to sell the share.
Many investors are afraid of losing price gains that have been achieved but not yet realized due to a reset in the share price and therefore sell shares that are in excellent shape both from a market and fundamental point of view. In this case, a stop loss or trailing stop loss can represent an option. This limits price losses or dynamically hedges future, further price gains.
If, on the other hand, a share has performed poorly, it should be put to the test and, if necessary, sold. Many investors mourn the losses suffered and shy away from their realization. This is self-deception, because the losses have already been incurred even without the sale.
Investors should sell shares before the loss in a single position becomes too great – preferably by setting up a stop loss directly at the time of purchase. In addition, a sale is also a good idea if – technically or fundamentally – there are better shares in which the liquidity released by the purchase can be invested.
Does it make sense to sell a stock at a loss?
Businessman shocked by lossThis question cannot be answered in general terms and each case should be considered in detail. First of all, the decision depends on whether you want to invest in the long or rather short term. As we have already mentioned, with long-term investments, price losses can be recovered if the shareholder waits long enough. Of course, the share price can always fall further in the long term, but a trader with a shorter investment horizon is under pressure to make a decision more quickly.
It also depends on the amount of losses and how much you are willing to accept. Furthermore, the expected future price development is also important. Read the forecasts of trading experts, wait for the latest business figures or observe economic developments. With enough background knowledge, you can get a good impression of whether it is worthwhile to continue holding a loss-making stock or whether it would be better to sell it.
Anyone wishing to buy or sell shares pays an order fee for each transaction. This fee varies depending on the broker or financial institution and it is worthwhile to make a broker comparison, because the individual cost items can sometimes differ significantly.
An important issue in connection with the sale of shares is also the final withholding tax. Since 2009, a tax on investment income has been due in Germany. This also includes, for example, dividends or realised capital gains. The amount of the tax is a flat rate of 25 percent and is withheld directly by most German brokers. If the brokers are domiciled abroad, the investor may have to take care of the taxation himself. With the final withholding tax, an annual tax-free allowance of 801 euros per person applies. A tax-free amount of 1,602 euros applies to married persons.
If you want to trade in shares, you should know the most important types of orders. There are many different types of orders for the sale of shares alone, and in the following we will show you the best known ones.
MARKET ORDER: IMMEDIATE EXECUTION OF THE SELL ORDER AT THE BEST POSSIBLE PRICE
A market order is executed immediately at the currently available price. This order type has the highest priority compared to other order types. Furthermore, a Market Order is executed in any case.
One of the disadvantages of a Market Order is the “slippage effect”. It can happen that the actual selling price deviates from the expected price due to price jumps.
SELL LIMIT ORDER: EXECUTION OF THE SELL ORDER UNDER CERTAIN CONDITIONS
If you want to sell at an advantageous price, place a sell limit order. In doing so, you specify the minimum price at which you want to sell. If a certain price mark is reached or even exceeded, the order is executed immediately. If the price moves below the limit, the order is not executed. With a sell limit order, the sell order is only executed if certain conditions are met.
STOP-ORDER: HEDGE PROFITS, LIMIT LOSSES
With a stop order, a sell order is executed if the price develops adversely or if you want to secure profits already made.
Place a stop below the current market price. If the stock price develops in the undesired direction, the stop order is automatically converted into a market order. The order is then executed at the next possible price, i.e. the share is sold immediately.
If you have identified a resistance level at which the rising share price is very likely to reverse, you can also set a stop order at this point. In this way, the stock is automatically sold when the price reaches the mark.
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