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I can't wrap my head around selling large quantity of stocks.

For example, assume Alan has 10,000 shares of company X that he bought 5 years ago at $5/share.

He is happy with the current share price of the company which is $227. He wants to sell all of his stocks, so he puts a sell order of 10k shares of company X where he owns stocks.

Now the unclear bit. When he puts the sell order through his broker, does he get all 10,000 shares sold out at once? Or does the broker put the sell order and wait until all 10k are sold and give Alan his money(i.e. deposit to his account)?

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You can put a "all or none" clause in your order so that all of the shares have to be sold or none of them are. Of course, this may make it harder to sell them and you may not get the best price for the lot, since you'll need to wait for a buy order for 10,000 (or more) shares.

More commonly, sub-lots will be sold as they get matched up with buy orders.

If the stock is even mildly liquid, you should have no trouble selling 10k shares in multiple lots with only mild price slippage (i.e. you may get worse prices as lots sell and take out buy orders). If the stock is illiquid, it may take some time and you may get more significant slippage.

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What's unclear?

According to the text of your question, to "get all 10,000 shares sold out at once" logically requires that there are enough people/organizations ready at that moment to buy those 10K shares. That's reasonable in highly liquid stocks.

If there aren't enough people right then who want to buy all 10K shares (for example, if it's a small company and so illiquid) it might take some time to find a buyer, and the price might drop from $227/share.

Remember, Alan's stock broker is just that a broker: it negotiates purchases and sales between their clients. That's all.

Of course, the world is more complicated than "that's all", because big investment companies can run their own mutual funds and ETFs, and they might buy the ETF shares from you.

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  • Stockbrokers are order takers. They have nothing to do with negotiating purchases and sales between their clients unless it's an investment bank doing OTC trades or perhaps crossing a trade between in house clients at current price. – Bob Baerker Dec 23 '20 at 3:34
  • @BobBaerker but don't the companies that individual stockbrokers work for have seats on the Exchange? While "your" stock broker is just takes an order, he passes it to a co-worker "in the pit" who does the actual trading. (This is all so ancient... in anyone still in "the pit" wearing a loud jacket and yelling to make a deal?) – RonJohn Dec 23 '20 at 3:40
  • Open outcry in the pits is long gone. These days, stocks are traded electronically, in milliseconds. Seats on the NYSE ceased to exist in 2006 when the exchange became a for-profit public company. – Bob Baerker Dec 23 '20 at 4:59
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To understand what could happen, you need to understand NBBO (National Best Bid and Offer) which is the current price. The bid price is the current sell price and the ask is the current buy price. Let's assume that the NBBO quote is $227.00 x $227.25

If you are selling fewer shares than the size available at the bid price of $227.00 then your sell order is filled completely at $227.00 .

If you are selling more shares than available at the bid price of $227.00 then there are several possibilities. If you take out all of that bid volume, you'll get a partial fill. If additional buying comes in at your bid price (perhaps there's an iceberg order on the books) then you'll sell some more shares at $227.00 and you'll continue to get filled at that price. If no additional shares come in at the bid then you'll only get a partial fill and share price will drop. However, if you placed an AON (All Or None order) then no shares will be sold since the entire order could not be filled at $227.00 .

The liquidity at the moment is what determines how much (if any) of your order will be filled. If liquidity is high, you'll have no problem selling all of your stock at $227.00 . If liquidity is low, you'll have to either wait for sufficient liquidity or you'll have to sell shares incrementally, hoping that you can get $227.00 for unsold shares.

You will receive money for whatever number of shares are sold.

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The "current share price" is just the price of the last trade.

If I sell 10,000 shares as a market order, I sell for the highest bid prices available in the order book.

If I place a limit order, I set an ask price I am happy with. Then, it may take more time to sell, but then I quite surely get the price I ask for.

If the share value drops, however, no one might want to buy my shares.

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  • "Current share price" is the NBBO quote. Last price is the price of the last trade that took place, whenever that occurred. – Bob Baerker Dec 23 '20 at 12:25
  • @BobBaerker Thanks. I wasn't aware of this distinction, as NBBO only exists in the US. – glglgl Dec 23 '20 at 12:30
  • I think that I should include U.S. in my answers if country of origin isn't indicated. If you are outside the U.S. then what do you see as a quote during trading hours? If there's an order book and best bid and ask are shown, wouldn't that be the equivalent of NBBO? – Bob Baerker Dec 23 '20 at 12:39
  • @BobBaerker I am not exactly sure, but on my platforms I use, usually I see all values (e. g. lowest ask, highest bid and last price) separated by exchanges (e. g. Frankfurt, Berlin, some other "traditional" exchanges and some other platforms). – glglgl Dec 23 '20 at 12:46
  • Lowest ask and highest bid price would be the equivalent of NBBO, just not officially named as such. And as it is with NBBO, your lowest ask and highest bid price (current price) would not necessarily be the same as last price. – Bob Baerker Dec 23 '20 at 12:50

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