Sell is a fundamental term in stock trading and it refers to the action of giving up ownership of a stock, exchange-traded fund (ETF), option, or other financial instruments with the intention of making a profit or mitigating a loss. The concept of selling is directly linked to the principle of the trading market — buying low and selling high.
When a trader sells, they receive cash for the equity they own. The goal is usually to sell at a higher price than originally purchased, thereby earning a profit. If the price of a stock falls significantly, selling can also be a defensive move to prevent further loss.
Selling isn’t just for when you no longer want an asset. Traders often sell securities that they don’t currently own, a practice called short selling. In this scenario, traders borrow shares and sell them in anticipation that the price will fall so they can buy them back at a lower price in the future, return them to the lender, and pocket the difference
