How To Sell Shares Of Stock Without A Broker – To buy shares, you will typically need the assistance of a stockbroker since you cannot simply call a stock exchange and ask to buy shares directly. When you use a stockbroker, whether a human or an online platform, you can choose the investment you want to buy or sell and how to handle the trade.
With this in mind, there are two broad categories of brokers to choose from: a full-service broker or an online/discount broker. Below, we will discuss how to use these options to trade stocks on your own.
How To Sell Shares Of Stock Without A Broker
We’ll also talk about a third option: the Direct Share Purchase Plan (DSPP), under which investors can obtain shares directly from certain public companies. This allows you to buy stocks online without a broker; however, this option is limited in its usefulness as you would have to maintain DSPPs in each company you own shares in, rather than having your entire portfolio housed in one place. Additionally, many online brokers today offer commission-free stock trading, often making it a simpler and cheaper option.
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In most cases, stocks are listed and traded on stock exchanges, licensed places where buyers and sellers meet, often with the assistance of a broker or other intermediary. These brokers will be members of the exchange and will use their access to buy and sell shares on your behalf. Major stock exchanges in the United States include the New York Stock Exchange (NYSE) and the Nasdaq market.
Smaller companies with less liquid shares and tiny market capitalizations (sometimes called penny stocks) can alternatively trade over-the-counter (OTC) on less regulated platforms such as OTC Pink Sheets. Shares of these companies are often more volatile and risky, so investors who choose to trade on the OTC market should engage in additional due diligence and understand the risks involved.
Full-service brokers are what some people picture when they think about investing: well-dressed businessmen sitting in an office and chatting with clients. These are traditional stockbrokers who will take the time to get to know you personally and financially.
They will look at factors such as marital status, lifestyle, personality, risk tolerance, age (time horizon), income, assets, debts and more. By knowing as much as possible about you, these full-service brokers can help you develop a long-term financial plan.
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These brokers can not only help you with your investment needs, but also provide assistance with estate planning, tax advice, retirement planning, budgeting and any other type of financial advice, hence the term “full service”. They can help you manage all your financial needs now and into the future and are for investors who want everything in one package.
In terms of commissions, full-service brokers are more expensive than discount brokers, but the value of having a human, professional investment advisor by your side may be worth the additional costs. Today accounts can be opened with as little as $1,000. Most people, especially beginners, fall into this category in terms of the type of broker they need.
Those who want a “set it and forget it” investment approach, but don’t have the money or time to hire a full-service broker, can opt for a roboadvisor. These are algorithmic investing platforms that you can manage through an app or website for a fraction of the cost of a traditional financial advisor.
Online/discount brokers, on the other hand, do not provide any investment advice and basically only accept orders. They are much less expensive than full-service brokers, as there is typically no office to visit and no certified investment advisor to help you. The cost is usually based on the transaction, and you can typically open an account on the Internet with little or no money. Once you have an account with an online broker, you can usually simply log in to their website and your account and be able to buy and sell stocks instantly.
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Remember that because these types of brokers provide absolutely no investment advice, stock advice or investment help of any kind, you are the one managing your investments yourself. The only assistance you will usually receive is technical support. Online (discount) brokers offer investment-related links, research and resources that may be helpful. If you feel you are knowledgeable enough to take on the responsibility of managing your own investments, or if you know nothing about investing but want to teach yourself, then this is the way to go.
The bottom line is that the choice of broker should be based on your individual needs. Full-service brokers are great for those who are willing to pay a premium to have someone else take care of their finances. Online/discount brokers, on the other hand, are great for people with little starting money and who would like to take on the risks and rewards of investing in themselves, without any professional assistance.
Sometimes, companies (often blue chip companies) sponsor a special type of program called a direct stock purchase plan (DSPP). DSPPs were originally conceived generations ago as a way for companies to allow small investors to purchase ownership directly from the company. Participating in a DSPP requires an investor to engage directly with a company rather than a broker, but each company’s system of administering a DSPP is unique.
Participating companies will offer their DSPP through transfer agents or another third-party administrator. To learn more about how to participate in a company’s DSPP, an investor should contact the company’s investor relations department.
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Once you choose your brokerage platform, you will need to create and fund an account before you can start trading. Today it is easier than ever to connect an online bank account and transfer funds, or electronically transfer an existing brokerage account to another company. You can also choose to make recurring deposits into your brokerage account to regularly grow your portfolio.
Once funded, you simply go online or call your broker to place a trade. Stocks are marked with a unique symbol, a one- to four-letter mnemonic code assigned to a particular company. MSFT, for example, is the ticker for Microsoft Inc. and AAPL is the ticker for Apple Inc. If you don’t know the ticker for your stock, it’s easy to look it up online or through your broker.
When you select the stock you wish to trade, you will be presented with a price quote, a variety of information about the stock’s price and activity. This will show you the last price the stock traded at, as well as a bid and a bid. The bid is the highest price at which someone in the market will buy a stock (and therefore is the best price at which you can sell to them). The bid, or ask, is the lowest price at which someone in the market is willing to sell (and therefore is the best price at which you can buy from them). The difference between the bid and ask prices is known as the spread. A tighter spread generally indicates that the stock market is quite active and liquid. A wider spread indicates the opposite. After considering the quote, you can place your order.
Market orders are the most basic order type and will guarantee you immediate execution at the prevailing market price. A limit order, on the other hand, allows you to set a specific price at which to buy or sell. If the price never reaches that limit level, the trade will remain active until canceled. Many of these trades are day orders that will remain valid until the end of the trading day. If you only want the order to be active briefly, you can instead specify with your broker that it be immediate or cancelable (IOC). Alternatively, if you want the order to remain in effect for more than one day, you can designate it as valid until canceled (GTC). You can also place other conditions on an order, such as a stop loss.
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Once you have placed your trade (in whole or in part), you will receive a fill, which is a summary of the details of your order.
You must be at least 18 years old in the United States to open a brokerage account and trade stocks. For someone under 18, a parent can set up a custodial account on her behalf.
YES. Several online brokerage platforms (such as Robinhood) offer commission-free trading in most stocks and exchange-traded funds (ETFs). Keep in mind that these brokers still make money from your trades, but by selling order flow to financial firms and lending your shares to short sellers.
The easiest way, in terms of finishing a trade, is to open and fund an online account and place a market order. While this is the quickest way to buy stocks, it may not always be the wisest. Do your research before deciding what type of order to place and with whom.
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You usually need to open an account with a broker to buy and sell stocks online. Some publicly traded companies, however, offer direct purchase of shares
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