What happens if I sell a stock at a loss?

Two things. First, the obvious: you receive less than you paid. If you bought $1,000 of stock and sell for $700, you have $700 in cash and the $300 is gone. Until you sell, that $300 is a "paper loss" that could still reverse. Once you sell, it is permanent.

Second, and this is the part beginners often miss, the loss has tax value. In the US, a realised loss offsets any capital gains you made that year, dollar for dollar. If you have more losses than gains, up to $3,000 of the excess can be deducted from ordinary income, and anything beyond that carries forward to future years. A $300 loss is not fun, but it can shave money off your tax bill.

There is one rule to know: the wash sale rule. If you sell at a loss and buy the same stock, or something substantially identical, within 30 days before or after, the loss is disallowed for tax purposes and added to the cost of the new shares instead. You can still buy it back; you just lose the immediate deduction.

Whether selling was the right call is a separate question from the mechanics. A loss on a business that has genuinely deteriorated is money well spent leaving. A loss on a good business during a bad market is often a sale you will regret.