The cost of selling a stock eats directly into how much you earn on a trade. For example, if you sell a stock after it rises 10 percent in value but have to pay a 1 percent commission, you've just lost 10 percent of your gain. Finding a way to sell a stock cheaply is one of the best ways to preserve your profits. Depending on the type of stock you have to sell and where you're willing to sell it, you have a number of options.
The competitive edge that online brokerage houses have over the more traditional Wall Street-based financial services firms is cost. You can typically sell any amount of a stock you want at an online broker for $10 or less per trade. Some firms will sell stock
Some of the larger, better-known companies that trade on the stock exchange offer direct purchase and sales programs for investors. Known as dividend reinvestment programs, or DRIPs, these programs allow investors to buy and sell shares directly from a company, often at no charge, in addition to providing dividend reinvestment service. While your trades won't be effective immediately when you place an order, as they will with a typical stock trade you enter online or place with a broker, you'll usually avoid having to pay any commissions. You can simply mail in your stock and ask the company to sell it for you.
If you want to sell an exchange-traded fund on the stock exchange, you might be able to do it for free. Exchange-traded funds are investments that trade on the exchanges just like stocks. An ETF typically owns a basket of individual stocks that represent a certain segment of the market, such as large-company stocks or technology stocks. Many of these ETFs can be sold for no commission whatsoever, particularly if you sell them back to the firm that originally issued them.
Some financial firms charge clients fees rather than commissions when they sell stocks. Although the annual fee for this type of service typically runs between 1 and 2 percent, you can usually sell stocks for no commission whatsoever, as long as you remain under a firm's excessive trading limit. Some advisers and clients alike view a management fee as a cost for overall financial planning and advice, rather than for transactions. If you're in a position where that type of service justifies the fee, you can consider the cost of your stock transactions to effectively be zero.