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How to Sell Your Stock on Robinhood: A Comprehensive Guide

So, you’re looking to sell your stock on Robinhood. It’s a common move, whether you’re taking profits, rebalancing your portfolio, or cutting your losses. The good news is that Robinhood makes the process relatively straightforward. Let’s dive in with a comprehensive guide that will lead you step-by-step.

The core process involves these steps: Open the Robinhood app, locate the stock you wish to sell, tap the “Trade” button, select “Sell,” enter the number of shares or the dollar amount you want to sell, review your order, and finally, swipe up to submit the order. Now, let’s break down each step and explore some essential nuances.

Selling Your Stock: A Step-by-Step Guide

Let’s get this done!

Step 1: Launch the Robinhood App: First things first, make sure you have the Robinhood app installed and that you are logged in to your account.
Step 2: Find the Stock: Navigate to your portfolio and locate the specific stock you wish to sell. You can usually find it by scrolling through your holdings or by using the search function.
Step 3: Tap the “Trade” Button: Once you’ve found the stock, tap on it to open its details page. You’ll see an option labeled “Trade”. This is your gateway to buying or selling.
Step 4: Select “Sell”: In the “Trade” menu, you’ll see two options: “Buy” and “Sell”. Choose “Sell”. This indicates that you want to unload some or all of your shares.
Step 5: Enter the Amount: Now comes the crucial part. You need to specify how much of the stock you want to sell. You have two primary options:
- Shares: Enter the number of shares you want to sell. For example, if you own 100 shares and want to sell 50, simply enter “50”.
- Dollars: Alternatively, you can specify a dollar amount. Robinhood will then calculate the corresponding number of shares based on the current market price. This can be helpful if you’re aiming for a specific cash-out value.
Step 6: Choose Your Order Type: Robinhood offers different order types, each with its own characteristics. Understanding these can significantly impact your trading outcome:
- Market Order: This is the most common type. It instructs Robinhood to sell your stock immediately at the best available market price. It guarantees execution but not necessarily the price you see when you place the order.
- Limit Order: This allows you to specify the minimum price at which you’re willing to sell your stock. Your order will only be executed if the market price reaches or exceeds your limit price. It doesn’t guarantee execution, but it gives you more control over the price.
- Stop Order: This order type is designed to limit your potential losses. You set a “stop price”. If the stock price falls to that level, your order becomes a market order to sell your shares.
- Stop Limit Order: This combines elements of both stop and limit orders. You set both a stop price and a limit price. When the stock reaches your stop price, a limit order is placed at your limit price. This gives you more control but also increases the risk of the order not being executed.
Step 7: Review Your Order: Before submitting, carefully review all the details of your order. This includes the stock symbol, the number of shares or dollar amount, the order type, and the estimated proceeds. Double-check everything to avoid errors.
Step 8: Submit Your Order: If everything looks correct, swipe up or tap the button to submit your order. Robinhood will then execute the order based on your chosen order type.

Understanding Settlement and Availability of Funds

Once your stock is sold, the funds won’t be immediately available for withdrawal. This is due to a process called settlement. Typically, it takes two business days (T+2) for the sale to settle. After settlement, the funds will be available in your Robinhood account for withdrawal or reinvestment.

Tax Implications of Selling Stock

Selling stock can have tax implications. When you sell a stock for more than you paid for it, you realize a capital gain. This gain is subject to capital gains taxes. The tax rate depends on how long you held the stock:

Short-term Capital Gains: If you held the stock for one year or less, the gain is taxed at your ordinary income tax rate.
Long-term Capital Gains: If you held the stock for more than one year, the gain is taxed at a lower rate, typically 0%, 15%, or 20%, depending on your income.

Keep accurate records of your stock purchases and sales to help you calculate your capital gains and losses accurately. You’ll need to report these transactions on your tax return. Consider consulting with a tax professional for personalized advice.

Frequently Asked Questions (FAQs)

Here are some frequently asked questions that can help you navigate selling stocks in Robinhood even more smoothly.

1. What fees does Robinhood charge for selling stocks?

Robinhood is known for its commission-free trading. This means you generally don’t pay a commission to buy or sell stocks. However, always double-check Robinhood’s fee schedule for any potential changes or regulatory fees.

2. Can I cancel a sell order on Robinhood?

Yes, you can cancel a sell order as long as it hasn’t been executed yet. To cancel, go to your order history, find the pending order, and tap the “Cancel Order” button. Be aware that market orders usually execute very quickly, making cancellation difficult.

3. What is a Good Faith Violation, and how can I avoid it?

A Good Faith Violation (GFV) occurs when you sell stock purchased with unsettled funds before those funds have settled. To avoid GFVs, make sure the funds you use to buy stock have fully settled before selling the stock.

4. How do I sell fractional shares on Robinhood?

Robinhood allows you to buy and sell fractional shares. When selling, you can specify a dollar amount, and Robinhood will sell the corresponding fraction of a share.

5. What happens if my sell order isn’t filled?

If your sell order isn’t filled, it could be due to several reasons:

Limit Price: If you placed a limit order, the market price may not have reached your limit price.
Low Volume: If the stock has low trading volume, there may not be enough buyers to match your sell order.

You can try adjusting your order type or price to increase the chances of execution.

6. How do I see my order history on Robinhood?

To view your order history, go to the “Account” section of the Robinhood app and tap “History.” This will show you a list of all your past transactions.

7. What are the risks of using market orders?

While market orders guarantee execution, they don’t guarantee the price. In volatile markets, the price can fluctuate rapidly between the time you place the order and the time it’s executed. This could result in you selling at a less favorable price than you anticipated.

8. Can I sell stocks during pre-market or after-hours trading on Robinhood?

Yes, Robinhood offers extended trading hours that allow you to trade before the market opens and after it closes. However, liquidity may be lower during these times, which can lead to wider spreads and potential price volatility.

9. How do I withdraw funds from my Robinhood account after selling stock?

Once your funds have settled (T+2), you can withdraw them to your linked bank account. Go to the “Account” section of the app, tap “Transfers,” and then “Withdraw Funds.” Enter the amount you want to withdraw and follow the instructions.

10. Does Robinhood report my stock sales to the IRS?

Yes, Robinhood is required to report your stock sales to the IRS. They will send you a Form 1099-B at the end of the year, which summarizes your trading activity. You’ll need this form to file your taxes.

11. What is wash sale and how do I avoid it?

A wash sale occurs when you sell a stock for a loss and then repurchase the same or a substantially identical stock within 30 days before or after the sale. The IRS disallows you from claiming the loss on your taxes. To avoid it, make sure you don’t rebuy stock within 30 days after taking loss.

12. How to sell covered call contracts on Robinhood?

Navigate to your Options contracts, choose the covered call contract you have active, select trade, then select close, then select amount, order type, review and submit the order.

Selling stock on Robinhood is a straightforward process, but understanding the nuances of order types, settlement times, and tax implications can help you make informed decisions and optimize your trading strategy. By following these guidelines and FAQs, you’ll be well-equipped to navigate the world of stock selling with confidence on Robinhood.