How long will it take for me to receive the money that I profited from the stock market?
What I'm trying to say is that if I place in an order into the market, and either profit or lose the money, how long will it take before it either adds the given amount of cash into my account, or how long it will take to deduct the given amount out of my account?
Once you buy a stock, ETF, mutual fund or any liquid security that trades on the stock market that increases in value after you have bought it will have what is called paper profit. A paper profit means you have unrealized capital gain in your stock or investment. It is the current market price of your stock compared to what you paid for it. Your gain will only be realized once you sell your stock.
Conversely, if your stock has gone down in value after you have bought it then you have a paper loss. Which is an unrealized capital loss in your stock or investment. It is the difference between what you paid for it and where it is currently trading. You will only realize your loss once you sell your stock while it is down in price from what was paid.
If you have not sold your stock position then you do not have a capital gain or loss for tax purposes, although there is a gain or loss in value.
Once you sell your stock or investment in your brokerage account then there a three days until the funds have settled in your account. At that time you will have access to the funds to reinvest or perhaps have a check or wire sent out to you.
The Securities and Exchange Commission (SEC) requires trades to be settled within a three-business day time period, also known as T+3. When you buy stocks, the brokerage firm must receive your payment no later than three business days after the trade is executed. Conversely, when you sell a stock, the shares must be delivered to your brokerage within three days after the sale. In other words, if you make a purchase trade on Monday, the shares would actually have to arrive in your account, and your money would have to arrive in the seller's account, on Thursday.
In addition to stocks, the T+3 rule also covers bonds, municipal securities, mutual funds (if traded through a broker), and some other securities transactions.
The fact that it takes three days for trades to settle can affect your ability to sell a stock, buy another stock, and then sell that stock in a period of less than three days. In other words, it may create a problem if you attempt a selling transaction on a stock you own, but whose purchase has not settled yet.
Generally speaking, if you are doing business with a major broker/dealer, your money will be "credited" to your account as son as the trade is executed.
There are a few caveats to this statement, however:
- Not all securities trade on the open market. For example, mutual funds trade after the close of business, whiles stocks and ETF's trade in real-time during the market day. So for mutual funds, you will receive the price at the close of the market.
- For "market" orders (orders of stocks or ETF's that you request to execute immediately), you are not guaranteed the current price:
- The stock/ETF may not have an "active" market. In other words, if the volume is very low, and there are currently no bid/asks on the security, then you have no idea what price you might get.
- There is a "Settlement Period" after the purchase/sale of securities, where your account will be "credited" but before the security is either free and clear in your account or cash is freely available after a sale. For example, a stock may be sold from your account, but the settlement date is "T+3", or the Trade Date + 3 days. For example, if you were to place a trade order on Monday, it would typically settle on Thursday. For other securities, such as mutual funds, settlement occurs on a different timeline.
When you purchase an investment, lets say ABC company stock, you own shares. The value of those shares will fluctuate. Once you sell the stock, the shares will be removed from your account and the cash will settle into your account 3 business days after you sold it.