Ready to make a move in your investment portfolio? Whether you're locking in gains, cutting losses, or rebalancing your strategy, knowing how to close a position on Charles Schwab is a fundamental skill for any investor. This comprehensive guide will walk you through the process step-by-step, ensuring you can confidently manage your investments.
Let's dive in!
Understanding the "Why" Before the "How"
Before we get into the mechanics, it's crucial to understand why you're closing a position. Are you taking profits after a good run? Are you limiting potential losses on a declining asset? Or perhaps you're simply rebalancing your portfolio to align with your long-term goals? Having a clear objective will help you choose the right order type and execute your trade effectively.
Navigating Charles Schwab: Your Gateway to Closing Positions
Charles Schwab offers multiple platforms to manage your investments, including their website, the Schwab Mobile app, and their advanced trading platforms like StreetSmart Edge. While the general process is similar across them, the exact button clicks might vary slightly. This guide will focus on the most common methods – the website and mobile app – as they are widely used by individual investors.
Step 1: Accessing Your Account and Finding Your Positions
Okay, let's get started! Have you ever wondered where all your investments are neatly organized? Charles Schwab makes it pretty straightforward.
- On the Charles Schwab Website:
- Log in to your account. Go to Schwab.com and enter your User ID and password.
- Once logged in, look for the "Accounts" tab, usually located in the top navigation bar.
- Under "Accounts," you'll typically find a dropdown menu or a section that says "Positions." Click on this.
- This page will display all your current holdings, categorized by account type (e.g., individual brokerage, Roth IRA). You'll see the symbol, quantity, current price, and unrealized gain/loss for each position.
- On the Schwab Mobile App:
- Open the Schwab Mobile app on your smartphone or tablet.
- Enter your User ID and password to log in.
- On the main screen, you'll usually see your "Accounts" listed. Tap on the specific account you want to manage.
- Within the selected account, you'll find a "Positions" tab or section. Tap on it to view your holdings.
Step 2: Initiating the Sell Order (Closing Your Position)
Once you've located the position you want to close, it's time to tell Schwab you want to sell.
- On the Charles Schwab Website:
- On the "Positions" page, find the specific security you wish to sell.
- You'll typically see an option next to the security, often a dropdown menu or a button, that says "Trade" or "Sell." Click on it.
- Alternatively, some interfaces allow you to click directly on the position's row to bring up a trade option.
- This will usually lead you to an "All-in-One Trade Ticket" or a similar order entry screen.
- On the Schwab Mobile App:
- From the "Positions" screen, tap on the specific stock, ETF, or option you want to sell.
- A detail screen for that security will appear. Look for a "Trade" or "Sell" button, and tap it.
- For options contracts, you might need to tap and hold the position until an action menu appears, then select "Close Position."
Step 3: Configuring Your Sell Order Details
This is where you specify how you want to close your position. Pay close attention to each field to ensure your order is executed as intended.
3.1: Action and Quantity
- Action: Ensure that "Sell" is selected. If you're closing a short position, you might see "Buy to Cover."
- Quantity: Enter the number of shares, contracts, or units you wish to sell.
- If you want to close the entire position, enter the full quantity.
- If you want to sell only a portion, enter the desired number of shares.
- Important Note on Fractional Shares: If your position includes fractional shares, you generally need to select "Close All" to liquidate the entire position, including the fractional part. Orders to sell only whole shares while leaving fractions behind may be rejected.
3.2: Order Type – Choosing How Your Trade Executes
This is a critical decision that impacts when and at what price your order will be executed.
- Market Order:
- What it does: Executes immediately at the best available market price.
- When to use it: When speed of execution is your top priority and you're willing to accept the prevailing market price. This is common for highly liquid securities.
- Consideration: For illiquid stocks, the price you receive might be significantly different from the last traded price, especially during volatile periods.
- Limit Order:
- What it does: Allows you to set a specific price at which you want to sell. Your order will only execute at your specified limit price or higher.
- When to use it: When you want to control the selling price and are not in a hurry. This is excellent for preventing unexpected price slippage.
- Consideration: There's no guarantee your order will fill if the market price doesn't reach your limit.
- Stop Order (Stop-Loss Order):
- What it does: Becomes a market order once a specified "stop price" is reached or passed.
- When to use it: Primarily for risk management. You set a stop price below the current market price to limit potential losses if the stock falls.
- Consideration: Once triggered, it becomes a market order, meaning it will execute at the next available price, which could be below your stop price in a fast-moving market.
- Stop-Limit Order:
- What it does: Becomes a limit order once a specified "stop price" is reached or passed. You also set a "limit price" for the order.
- When to use it: Provides more control than a pure stop order. It helps limit potential losses while also preventing execution at an undesirable price if the market gaps down significantly.
- Consideration: If the price falls rapidly below your limit price, the order may not be filled.
3.3: Time in Force – How Long Your Order Remains Active
This determines how long your order will be active in the market.
- Day: Your order will remain active only until the end of the current trading day. If not executed, it will be canceled. This is the most common selection.
- Good-Until-Canceled (GTC): Your order will remain active for up to 180 calendar days (Schwab's standard) or until it is executed or you manually cancel it.
- Extended Hours (AM/PM): Allows your order to participate in pre-market or after-hours trading sessions. Usually only available for Limit orders.
- Fill-or-Kill (FOK): Requires the entire order to be filled immediately and completely. If not, the entire order is canceled.
- Immediate-or-Cancel (IOC): Requires any part of the order that can be filled immediately to be filled, and any remaining shares are canceled.
3.4: Cost Basis Method (for Tax Purposes)
When selling shares, especially if you've bought them at different times and prices, Charles Schwab will ask you to specify the "cost basis method." This impacts your capital gains or losses for tax reporting.
- First-In, First-Out (FIFO): Assumes you are selling the shares you bought earliest. This is often the default method.
- Last-In, First-Out (LIFO): Assumes you are selling the shares you bought most recently.
- High Cost/Low Cost: Allows you to sell shares that result in the highest or lowest capital gain/loss.
- Specific Shares: Allows you to manually select which specific shares (lots) you want to sell. This is useful for tax-loss harvesting or precise tax planning.
If you're unsure which method to choose, consult with a tax professional. Schwab's platform often defaults to FIFO, but you can typically change it before placing the order.
Step 4: Reviewing Your Order
This is a crucial step to prevent errors. Before hitting that "Place Order" button, take a moment to carefully review everything.
- On the Charles Schwab Website and Mobile App:
- After filling out all the details, click "Review Order."
- A summary screen will appear, showing:
- The Action (Sell)
- The Symbol and Company Name
- The Quantity
- The Order Type (Market, Limit, Stop, etc.)
- The Limit Price (if applicable)
- The Stop Price (if applicable)
- The Time in Force
- The estimated Commission/Fees (for most online stock and ETF trades, Schwab charges $0 commission, but other fees may apply for options, OTC stocks, or broker-assisted trades).
- The Estimated Proceeds
- Double-check every detail. Does the quantity look right? Is it a "Sell" order, not a "Buy"? Is the price what you intended?
Step 5: Placing Your Order
Once you're satisfied with your review, it's time to execute the trade.
- On the Charles Schwab Website and Mobile App:
- After reviewing, if everything looks correct, click "Place Order" or "Submit Order."
- You'll usually receive a confirmation message indicating that your order has been placed successfully. This message will often include an order number for your reference.
Step 6: Confirming and Monitoring Your Order
After placing your order, you'll want to confirm its status and monitor its execution.
- On the Charles Schwab Website:
- Navigate to the "Activity" or "Orders" tab within your account.
- Here, you can see the status of your recent orders (e.g., "Open," "Partially Filled," "Filled," "Canceled").
- Once your sell order is "Filled," the position will no longer appear in your "Positions" tab (or the quantity will be updated if it was a partial sell).
- On the Schwab Mobile App:
- Go to the "Activity" or "Orders" section, typically accessible from the main navigation or within your account details.
- You can track the status of your sell order here.
Important Considerations and Tips:
- Market Hours: Most trading occurs during standard market hours (9:30 AM to 4:00 PM ET, Monday to Friday, excluding holidays). Orders placed outside these hours will typically be queued for the next trading day, unless you specify extended hours trading.
- Settlement Time: When you sell a security, the funds aren't immediately available for withdrawal. Stock and ETF trades typically settle in T+2 days (trade date plus two business days). Options and mutual funds may have different settlement periods.
- Fees and Commissions: While Charles Schwab offers $0 online commission for listed stocks and ETFs, other fees may apply. This includes a per-contract fee for options trades, commissions for OTC (Over-The-Counter) equities, and potential service charges for broker-assisted trades. Always review the estimated fees before placing your order.
- Tax Implications: Closing a position, especially if it results in a gain, has tax implications. Keep records of your cost basis and consult with a tax professional for personalized advice.
- Margin Accounts: If you are closing a position in a margin account, ensure you understand the impact on your margin balance and buying power.
- Rebalancing: Closing positions is often part of a larger rebalancing strategy. Consider your overall portfolio allocation before and after the sale.
- Research and Due Diligence: Always conduct thorough research before buying or selling any security.
10 Related FAQ Questions
Here are 10 frequently asked questions about closing positions on Charles Schwab, with quick answers:
How to close a partial position on Charles Schwab?
You can close a partial position by entering less than the full quantity of shares/contracts you own in the "Quantity" field on the trade ticket.
How to close an option contract on Charles Schwab?
To close an option contract, navigate to your "Positions," select the option, and choose "Close Position." You'll then specify if you're "Selling to Close" (for a long option) or "Buying to Close" (for a short option), and choose your order type and quantity.
How to sell mutual funds on Charles Schwab?
Go to your "Positions," find the mutual fund, and select the "Sell" option. Enter the dollar amount or number of shares you wish to sell and choose your desired order type (typically "NAV" for mutual funds).
How to sell short positions on Charles Schwab?
To close a short position, you will place a "Buy to Cover" order for the same number of shares you originally shorted. This will reduce your short exposure.
How to set a stop-loss order on Charles Schwab?
When placing a sell order, select "Stop Order" or "Stop-Limit Order" as your order type. Then, enter your desired stop price (and limit price for a stop-limit order) in the designated fields.
How to cancel a pending order on Charles Schwab?
Go to the "Orders" or "Activity" section of your account. Locate the pending (open) order and select the "Cancel" option. Be aware that market orders are often filled too quickly to cancel.
How to check the status of my sell order on Charles Schwab?
After placing an order, navigate to the "Orders" or "Activity" tab on the website or mobile app. Here you'll see if your order is "Open," "Filled," "Partially Filled," or "Canceled."
How to determine the cost basis for a sale on Charles Schwab?
When placing a sell order, especially if you have multiple lots of the same security, Charles Schwab will allow you to select a cost basis method (e.g., FIFO, LIFO, Specific Shares). This impacts your capital gains/losses for tax purposes. You can find more details under "Cost Basis" settings.
How to withdraw money after closing a position on Charles Schwab?
Once your trade has settled (typically T+2 business days for stocks/ETFs), the funds will be available in your account's cash balance. You can then initiate a withdrawal via electronic funds transfer (EFT), check, or wire transfer from the "Transfers & Payments" section.
How to get help from Charles Schwab customer service if I'm stuck?
If you encounter any issues, Charles Schwab offers excellent customer support. You can typically find their contact information (phone number, chat, or branch locator) under the "Contact Us" section on their website or within the mobile app. Their general assistance line is 1-800-435-4000.
