- 1). Identify the stock you want to replace. You have the option of exiting the position entirely by getting rid of all of the shares or replacing just a portion of your stock investment. For example, if you own 1,000 shares of Company ABC, you can liquidate the position by unloading all the shares or do a partial sale of only half the shares.
- 2). Pick a replacement stock in which you will invest the money you had in the original stock. Ideally, the new stock should meet your investment criteria, such as having a low price-to-earnings ratio or offering a high dividend payout. Do your homework before adding a new stock to your portfolio.
- 3). Place an order with your broker to sell the stock you want to unload from your account. A limit order sets a specific price target, whereas a market order is for current market price. You can wait for confirmation of the transaction before placing a buy order for the new stock. You also have the option of conducting both trades -- a sell and buy order -- simultaneously. If you have an online trading account, enter the ticker symbol of the original stock you want to sell, the number of shares and your selling price. Likewise, place a buy order for the replacement stock.
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