Best Order Type to sell individual stocks

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tigerfan64
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Joined: Sun Apr 14, 2019 9:00 pm

Best Order Type to sell individual stocks

Post by tigerfan64 » Sun Apr 14, 2019 9:07 pm

I am new to the Three-Fund Portfolio and investing in general. I have some stocks in Vanguard account that I purchased before reading the Three Fund Portfolio Book and I want to sell them and put the money into my three funds.
What is the best Order Type when selling these shares?

venkman
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Re: Best Order Type to sell individual stocks

Post by venkman » Sun Apr 14, 2019 10:05 pm

Use a limit order, and set the limit price a bit below whatever the current market price is. The order should still execute at the current market price, but you've got insurance, just in case a glitch happens at the wrong time.

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mhc
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Re: Best Order Type to sell individual stocks

Post by mhc » Mon Apr 15, 2019 8:55 am

If the stocks have reasonable volume, then do a market order away from open or close.

michaelingp
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Re: Best Order Type to sell individual stocks

Post by michaelingp » Mon Apr 15, 2019 9:19 am

venkman wrote:
Sun Apr 14, 2019 10:05 pm
Use a limit order, and set the limit price a bit below whatever the current market price is. The order should still execute at the current market price, but you've got insurance, just in case a glitch happens at the wrong time.
With Fidelity, at least, you will get a bunch of scary warnings about limit orders, which you can ignore if you want. I think what the warnings are trying to say is that if the price is falling, and falls below the limit you specify, then your shares will not be sold. In the mean time, the price may fall even further, and you will get even less when you re-enter your sell order. But as others mention, this is all unlikely with broadly traded stocks.

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Phineas J. Whoopee
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Re: Best Order Type to sell individual stocks

Post by Phineas J. Whoopee » Mon Apr 15, 2019 1:34 pm

Place a sell limit order, colloquially an ask, and you won't sell below the limit price you set. The order may never execute, depending on future price moves.

Place a market order to sell and it will execute, but you won't know the price until after the transaction.

For a reasonably large company under usual conditions a market order probably will be good enough, but it does expose you to price risk. A limit order doesn't expose you to that risk, but your limit may never be met. You can, of course, adjust your limit.

Which risk do you wish to take? The answer to that question will answer the question you asked.

PJW

livesoft
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Re: Best Order Type to sell individual stocks

Post by livesoft » Mon Apr 15, 2019 1:39 pm

There is no best order type which is why many different types of orders are available at brokerages.

Since one should have a broker that doesn't charge any commissions, one can experiment and use different types of orders with different number of shares until all the individual stocks are gone.

There is a discussion of order execution in this thread (but it is probably too much for the OP):
viewtopic.php?t=165732

Essentially, it probably doesn't matter what order type that one uses for an individual stock that has an average daily volume of more than 100,000 shares.
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