What Is Selling?
Selling means turning the shares you hold back into cash. In a regular account you can only sell shares you already own.
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Text version · Stock Basics, lesson 5: “What Is Selling?”
Selling means turning the shares you hold back into cash. In a regular account you can only sell shares you already own.
Selling = swapping shares back for cash
Proceeds = sell price × shares. You can sell everything at once or just part.
You can only sell what you own
In a regular account you can't sell more shares than you hold. The difference between the sell price and your cost basis determines your profit.
Sell part: half locked in, half still floating
For the part you sell, P&L = (sell price − cost per share) × shares sold, and it's locked in. The part you keep is still unrealized P&L and keeps moving with the price.
Key takeaways
- Sell: shares → cash. Proceeds = sell price × shares (minus commission).
- You can sell everything or just part. In a regular account you can sell at most the shares you hold.
- Profit on the sale = (sell price − cost per share) × shares sold. The rest of your position keeps moving with the price.
- Once you've sold everything, whatever the stock does next no longer affects you.
Try it yourself
You can do these exercises in this lesson's interactive simulation:
- Keep the price at $80 and sell 30 shares: how much cash do you receive?
- Click "Reset account", sell 50 shares first, then drag the quantity to 60: how many shares does the hint say you can sell at most?
- Drag the price to $35 and sell again: is the profit this time positive or negative?
- After selling everything, drag the price: do your total assets still change?
Quiz and explanations
- 1. You hold 50 shares. In a regular account, what's the most you can sell?
- Answer: 50 shares.You can only sell shares you own.
- 2. You sell 30 shares at $80 each. How much cash do you receive (ignoring fees)?
- Answer: $2,400.30 × $80 = $2,400.
- 3. You bought 100 shares at $40 and now sell 60 of them at $35 (ignoring fees). What's the P&L on this sale?
- Answer: −$300.(35 − 40) × 60 = −$300. The other 40 shares haven't been sold, so their P&L is still unrealized.
Terms in this lesson
- buying power (Buying Power): The cash in your account you can use to buy stock right now.
- cost basis (Cost Basis): How much you spent in total to buy those shares.
- market value (Market Value): Number of shares × current price: what your stock is worth right now.
- profit (Profit): Sale proceeds − purchase cost − fees: the money you actually pocket.
- total assets (Total Assets): Cash + the market value of your shares at today's price.
- unrealized P&L (Unrealized P&L): The on-paper profit or loss at today's price on shares you haven't sold yet; it moves as the price moves.