New users who trade on eToro often wonder how to sell on eToro? In this article, we detail it.
Maybe you are trading traditionally on a traditional exchange. You are only used to 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?
Table of Contents:
Sell and close a position (order): what’s the difference?
The term “sell shares” 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 opening and closing orders, buy orders, and short sell orders. The reason is that they have a “short selling” trade.
Closing a position (order)
What does eToro close trade mean? Selling means closing a position (order) on the eToro trading platform.
First, closing a trade/position means ending an investment you’ve made previously.
For example, you hold an amount of AAPL shares, which is $5600. If you choose to close your position, you are finishing your investment in $5600 shares and you will receive $5600 and profits/losses on 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 actions.
Closing a position (order) involves much more than investing in stocks. It is relevant for all types of asset investment on the eToro platform. The term closes an order is synonymous with the typical expression of selling a security.
Short Selling Order
However, selling a stock or any asset has other meanings on the eToro platform, which we will now explain. “Short selling” is different from “closing a position (order)”.
You want to buy Amazon shares or any other financial asset on the eToro platform. It’s the screen you see:
At the top of the screen, you can BUY (green) or SELL (red) the title. You may be wondering: how can I sell a stock that I don’t own? Very good question.
The answer is that “sell” refers to “short selling.” You are opening an order where you believe Amazon shares will fall in value. Your order is called a contract for difference or CFD, as seen in this image. You are not selling the asset but you agree with eToro through which your position will “sell”. In this Agreement, the terms agreed between you and eToro state 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.
Buy order
If you bought Amazon shares, you would say “I open a long position with Amazon”. It means that you are opening a position where you believe amazon shares will increase in value.
Steps to close a position (order) on eToro
Then you understood that “sell shares” is closing the position (order). Here’s how:
Step 1: First, click “Portfolio” to see all the positions you currently have open.
Step 2: Next, click on the specific asset to see your individual open positions.
Step 3: Click the red X next to the location you want to close. (On the eToro mobile app, swipe left where you want to close and tap the red X.)
Step 4: Finally, click on “Close Transaction”.
Your request is made during market opening hours or as soon as the market opens.
Common user errors
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. Go to Amazon again and open a short selling 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 is losing money.
So we advise new users to trade with the eToro demo account first. Instructions for using the demo account are here.
Conclusion
So we get the main idea from this article. “Closing a trade” means the cessation of an investment. Put simply, it’s called “selling” a stock or financial asset.
When you understand the basic concept correctly, everything is simple, right?
