Liquidating your stocks is selling them off at the right time and cashing in your profits. This is a process of booking your profits at the right time. It is necessary to liquidate them before it is too late and stock prices start crashing down again. It's crucial to be aware of when exactly one should think of taking such a step. Timing is of essence here.
When to Liquidate Stocks
As you know, stocks can be liquidated, as and when you wish. After all, you have paid money for the stocks and you own them yourself. Ergo, you have the right to sell them off, whenever you wish. All investors come in the stock market for profitable stock trading and hence ideally, they should sell only when good profits are guaranteed.
Every stock has its own targets on technical charts which should be identified before the sell order can be executed. It would not be advisable to liquidate your position early, if there is no reason or indication that the stock price would go down.
Holding stocks for a long time can also earn you financial benefits in the form of bonus shares and attractive dividends. Liquidating stocks, when you really need the money, should be the strategy you should adopt.
You will be able to liquidate your stocks, only if they are free. People who pledge their shares with banks and financial institutions, by taking loans against them, may not be able to liquidate their position, unless the loans are completely paid off. Therefore, one must be careful before taking any loans against securities.
How Can You Liquidate Stocks
Stocks can be liquidated by giving a sell order to your broker. For this, you need to have your trading account with the broker. While you give the sell order, you will have to clearly tell how many securities you wish to sell. The stocks will obviously be sold at the current market price.
For his services, the broker will be charging you commission or brokerage. Sometimes, it has been observed that this brokerage becomes quite significant and can eat into your profits. Therefore, thinking twice before liquidating your position is a must for all investors.
You can also do it yourself with the online trading facility provided by most brokers. In this case, there is no need of a physical broker and the sell transaction is executed on just a single click. If you wish to avoid the brokerage fees, then you can sell your shares directly to a person through an off-market transaction.
In this case, by filling up a form and submitting it to your broker, you will be able to transfer securities from your account to the buyer's account in return for cash. It would not be possible to liquidate stocks in the open market, if there are no buyers available for the same.
Such situations arise when no investor invests in a stock due to any reason. While you liquidate stocks, you should know, what is a stop loss order. A stop loss helps you sell shares at the right time by selling them off at a particular level that minimizes risk. Liquidating stocks is easy but you should use your research to do the same at the right time.