Stock Sale Timeline: Factors Affecting Execution Time

Just because a seller performs the necessary functions to sell a stock, it doesn't mean the order will always be executed. For a stock to sell, there must be someone on the other side of the trade willing to buy.

Brokers

On a regulated stock exchange, brokers act as intermediaries and are responsible for matching buyers and sellers in the marketplace. From a logistical perspective, these brokers are ultimately tasked with executing the trade. However, not all trades are the same, and brokers must be aware of the participant pool in the market in which they operate.

Order Type

The order type a seller assigns to a trade can often dictate the time it takes for a trade to go through. For instance, a market order lets the broker know that a seller wants to sell a stock immediately at the best available price. In this case, the broker will sell the stock at the first available price provided by a prospective buyer of that stock. A limit order instructs a broker that the seller would like to sell a stock at a particular price, no matter how long it takes. The speed at which a limit order is executed depends on when the stock reaches that particular price.

A stop-loss order instructs the broker to sell the stock beyond a certain price; stop-loss orders are widely used as a safety measure for traders when the direction of a stock's price is unclear. Although these order types may differ in execution time if the broker ranks them as different priorities, liquidity becomes another factor for the timeliness of selling a stock.

Liquidity

Liquidity is the availability of assets in a given market -- in this case, the stock market. For a marketplace to function optimally, it must have some liquidity. If a stock is highly liquid, it shouldn't be a problem to find opportunities to buy and sell it. However, if a stock has very low liquidity, this might be a sign that demand for the stock is weak, and selling the stock might be difficult.

From a seller's perspective, demand for a stock is necessary for a broker to attract potential buyers and carry out the seller's trade. The time it takes for a trade to be executed can also depend on the amount of stock a seller wants to sell. If the amount of stock offered for sale is too large for a broker to match with a buyer in one trade order, the broker might split the stock into multiple orders. These types of orders can delay the time it takes to sell all shares belonging to the original sell order.

Market Capitalization

The market capitalization of a stock plays a role in the market liquidity of that stock. Market capitalization is the overall value of a company measured by the amount of the company's stock, or shares, available in the marketplace, multiplied by the price per individual stock. Larger companies tend to have higher market capitalization, whereas small companies have a lower market capitalization.

All U.S. national securities exchanges have established market hours. A seller can place an order with her online brokerage outside of these hours of operation, but the trade isn't executed until market hours begin. Market hours and the relative time zones affecting market participants will impact the speed at which stocks can be sold.