If every purchase requires a seller in the stock market, how do stocks go up or down?
2006-07-10 09:10:38 · 6 answers · asked by benspaniard1 2 in Business & Finance ➔ Investing
well, supply and demand characteristics are definately the main factors determining the stock price. but the real player behind this would be something else.. see a stock broker or stock buyer wont get a dream one night that tomorow i need to buy such and such stock and everybody had the same dream makes them buy it... or either way...
there are analysts working in the market ..brokers working in the market who make suggestions to buyer weather to buy or not depending on their investmet activities. by their i mean the company's , see if a company buys a major asset using some kind of financial body it is looked as a positive cash generating activity and hence boosts the price by a bit... say it sold its major asset like a plant some where in california which is going to reduce their cash flow by a bit or some other reason generating a negative impact, this in turn affects the price of all the stocks.. now you might be wondering who might be doing this every day like do comapany's really buy sell everyday.. well their investment structure usually changes often and rest is dependent on the predictions made by market price generators like brokers or agents, the ones on the floor they some times false techniques to raise prices too.... but not that much these days... but this is a vague picture of how they do it.
2006-07-10 09:51:33 · answer #1 · answered by Anonymous · 1⤊ 1⤋
Let's say I buy a stock today for $10. I pay $10, and the seller gets $10 (ignoring commissions for now).
In two weeks time (ideal situation) perhaps the current price of that stock is $20. If I sell it at $20, the buyer pays me that amount.
It's the same situation as somebody who buys a collectible item (i.e. a baseball card or painting) at a particular price, and then waits until they find somebody willing to pay more for that item.
2006-07-10 16:55:24 · answer #2 · answered by jrlatmit 3 · 0⤊ 0⤋
It has to do with supply and demand.
If more people want to buy a certain stock, the price goes up since they will bid up the price.
To make a simple example, if you were selling a car and only one person wanted to buy it, you would not get a good price since there is no competition. If nobody wanted to buy it, you would be forced to lower the price until some did want to buy it.
On the other hand, if 100 people want to buy your car, they will each make a bid and you can take the highest one. You get a better price.
Same thing happens with stocks. It goes up when people want to buy it, and goes down when nobody wants it.
2006-07-10 16:17:33 · answer #3 · answered by jonny r 2 · 0⤊ 0⤋
Depending on supply and demand. If several buyers demand a stock, and there aren;t that many sellers each purchase allows sellers to demand more for the stock. and the price goes up.
2006-07-10 16:15:23 · answer #4 · answered by stick man 6 · 0⤊ 0⤋
Econ 101: In every free market, price is determined by supply and demand.
If there is more demand than supply (more buyers than sellers), the price goes up, and vice versa.
2006-07-10 16:15:44 · answer #5 · answered by dredude52 6 · 0⤊ 0⤋
by the bid price and the asking price. What are you willing to pay for each listed stock?
2006-07-10 16:13:35 · answer #6 · answered by golferwhoworks 7 · 0⤊ 0⤋