How Long Does It Take to Sell Stock?

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More accessible than ever to the novice investor, buying and selling stocks has become all the rage as apps like Robinhood have gained popularity. Catering to what are known as "retail investors," Robinhood has seen its user base grow to over 20 million people, according to Statista. With that stunning growth has come a whole host of questions those new to the game are asking about investing. A common question is, how long does it take to sell stock?

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How Long Does it Take to Sell Stock?

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The answer, of course, is that it depends. The buying and selling of stocks are regulated by the Securities and Exchange Commission (SEC). According to the SEC's own website, the organization's mission is to safeguard investors, ensure a fair and orderly marketplace and aid in the formation of capital.

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One way the SEC achieves these important goals is by regulating who can own stock and the terms of buying and selling that stock. Within these rules is where those interested can find the relevant information about waiting times for selling stock.

The T+3 Rule

Before the explosion of online trading, many stocks purchases and sales happened with cash and stock certificates (the transfer of physical money and paper stock certificates). At that time, the SEC, again in order to maintain the markets in an organized fashion as outlined in its mission statement, had a three-day rule. This meant that any trade had to be completed within three days. It was, and still is, known as the T+3 Rule, per the team at NASDAQ.

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If you bought stock in a company, you had three days to pay for the stock, and the company had three days to deliver the stock certificates. The rule still applies today. However, with most transactions being nearly instantaneous and online, you most likely will get your stock, or money from selling your stock, much more quickly.

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That is not to say that the T+3 Rule is irrelevant. There are scenarios involving things like dividends that make the T+3 Rule important to know about.

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Why You Might Have to Wait

There are some circumstances in which you might not get stocks immediately. Considering again the online trading platform Robinhood, you may or may not have heard of their member referral program. If you refer someone to Robinhood and that person creates an account, you could receive free stock.

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However, Robinhood explains that it has a three-day waiting period from the time you get the stock to when you are able to sell it. After the three-day period has ended, you are able to sell the stock and either reinvest it in another company or cash out your money and transfer it to your bank account.

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With that being said, it should be noted that there is usually a gap between selling your stock and being able to take the money out of your account. This is true whether you are using a platform like Robinhood or a more traditional broker. However, you can usually use the proceeds from the sale of one stock to purchase another stock immediately.

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Additional Stock Sale Delays

Finally, you might have to wait a day to sell stock if you are trying to sell it the same day you bought it. If you make more than three same-day trades in one week, you might be considered what is known as a pattern day trader, per FINRA. Pattern day traders have different rules they must follow, such as keeping a minimum ​$25,000​ balance in their brokerage account in order to be able to make same-day trades.

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If you are not a pattern day trader and you are just looking to sell some stock, you can most likely do it as soon as you like.

Consider also:Is the Robinhood App Safe? Why It's Risky for Beginner Traders

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