How Long Does It Take to Sell Stock?
Understand the full timeline of selling stock, from order placement to cash in hand. Learn how long it truly takes to access your funds.
Selling stock involves distinct stages, from immediate order execution to the eventual availability of funds. Understanding these phases is important for managing your investments and cash flow effectively.
The Instantaneous Execution of Your Order
When you sell stock, you place an order with your brokerage. A “market order” instructs the brokerage to sell shares immediately at the best available price. These orders execute rapidly, often within seconds.
A “limit order” specifies a minimum price you are willing to accept. This provides more control but introduces uncertainty regarding execution time. A limit order will only execute if the stock’s price reaches or exceeds your specified limit, meaning it could take longer to fill, or it might not fill at all. The actual execution for a limit order depends entirely on market movement.
The Settlement Period
Even after your sell order executes, the transaction is not immediately finalized. “Settlement” is the official process where securities ownership transfers to the buyer, and cash proceeds transfer to the seller’s brokerage account. This period allows time for verifying and recording the transaction.
As of May 28, 2024, the standard settlement period for most stock trades in the United States is “T+1”. This means the transaction settles one business day after the trade date. For example, if you sell stock on a Monday, it will settle by the end of Tuesday. This shortened timeframe aims to improve market efficiency and reduce risks.
When Your Funds Are Truly Available
While funds from a stock sale settle in your brokerage account on a T+1 basis, they may not be immediately available for withdrawal to your personal bank account. Brokerage firms often have internal policies that govern when settled funds can be moved out of the investment account. This can sometimes mean an additional day or two for processing before the cash is designated as “withdrawable cash.”
The method you choose for withdrawal also influences the overall timeline. Automated Clearing House (ACH) transfers, a common and typically free option, can take an additional one to three business days to reach your linked bank account after they are initiated from your brokerage account. Wire transfers, while often incurring fees, may offer faster access to funds, sometimes on the same day they are initiated.
It is important to understand the distinction between settled funds and withdrawable funds to avoid potential issues. Attempting to use the proceeds from a stock sale to purchase other securities before those funds have fully settled and become available can lead to what are known as “good faith violations.” A good faith violation occurs if you buy a security with unsettled funds and then sell that new security before the original sale’s proceeds have fully settled. Incurring multiple good faith violations within a 12-month period can result in your brokerage account being restricted, allowing you to buy securities only with fully settled cash for a period of 90 days.