Detailed instructions on how to sell on eToro
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New users trading on eToro often wonder how to sell on eToro? In this article, we detail that.
Maybe you are trading traditionally on a traditional stock exchange. You are used to only buying and selling. But when trading on eToro, there are more than two orders, confusing many users. And they don’t know how to operate?
Sell and close a position (order): What’s the difference?
The term “sell stock” sounds very simple, and it is. However, on eToro, it can have two different meanings.
On its trading platform, eToro uses two separate terms to avoid confusion. These include Open and Close orders, Buy Orders, and Short Sell Orders. The reason is that they have a “short sell” trade.
Closing a position (order)
What does close trade mean eToro? To sell is to close a position (order) on the eToro trading platform.
First, Closing a trade/position means terminating an investment you made earlier.
For example, you hold an amount of AAPL stock, which is $5600. If you choose to close your position, you are ending your investment in shares $5600, and you will get back $5600 and profit/loss to your account. When you close the position, you no longer own the AAPL stock.
In the image below, you can see the screen when you are about to close a trade in AAPL stock.
Closing a position (order) involves more than just investing in stocks. It is relevant to all types of asset investment on the eToro platform. The term closes an order is synonymous with the typical expression of selling a stock.
Short Sell order
However, selling a stock or any asset has other meanings on the eToro platform, which we will now explain. “Selling short” is different from “closing a position (order).”
You want to buy Amazon stock or any other financial asset on the eToro platform. It is the screen you see:
At the top of the screen, you can BUY (green) or SELL (red) the stock. You may be wondering: How can I sell a stock I don’t own? Excellent question.
The answer is that “selling” refers to “short selling.” You are opening an order where you believe Amazon stock will decrease in value. Your order is called a contract for difference or a CFD, as seen in this image. You are not selling the asset but agreeing with eToro through which your position will “sell.” In this Agreement, the terms are agreed upon between you and eToro stipulate that you receive a certain amount if the asset decreases in value. If it increases in value, you lose a certain amount based on the amount you invest.
If you bought Amazon stock, you would say, “I open a long position with Amazon.” It means you are opening a position where you believe Amazon stock will increase in value.
Steps to close a position (order) on eToro
So you have understood that “selling stock” is closing the position (order). Here’s how:
Step 1: First, you click on “Portfolio” to see all the positions you currently have open.
Step 2: Next, you click on the specific asset to see your open individual positions.
Step 3: You click the red X next to the position you want to close. (On the eToro mobile app, swipe left where you want to close and tap the red X .)
Step 4: Finally, you click “Close Transaction.”
Your request is made during market opening hours or as soon as the market opens.
Common mistakes of users
New users on the eToro trading platform often confuse a closing order with a short sell order.
The following is an example of that typical confusion. You have opened an order to buy 10 Amazon shares. Now that order is profitable, and you want to collect the money.
But instead of closing an order to buy 10 Amazon shares. You go to Amazon again and open a short sell order of 10 shares. Your account has two orders: 1 order to buy 10 Amazon shares and one order to short sell 10 Amazon shares. You see, your investment is not increasing but losing money.
So we recommend new users trade with the eToro demo account first. Instructions for using the demo account are here.
So we get the main idea from this article. “Close a trade” means the termination of an investment. In layman’s terms, it’s called “selling” a stock or financial asset.
When you understand the basic concept correctly, everything is simple, right?
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