Why are some stock trades labeled buys while others sells?

Question

All transactions have a buyer and seller right? So what makes the different when watching streaming stock transactions? Also, lets say the Bid is 1.00 and the ask is 1.01. If I sell, I sell it for 1, if I buy, I buy it for 1.01. But if I sell it for 1, isn't someone at the same time buying it from me for 1? So how come I can't do that?

Thanks in advance

Thanks..so are the bid/ask created by limit orders while the transactions occur when someone executes a market order to buy or sell at the curent bid/ask?

Thanks girlwhokn and bookbyte

Answer 1

If there is an imbalance between buyers and sellers the market maker or specialist will take up the excess. It is their responsibility to provide liquidity in the stocks they manage.
They profit from the spread between the bid and ask when they match up buyers and sellers.

You are free to find your own buyer for your stock, and negotiate a price. Its just a lot easier to use the established exchanges.

Limit orders will influence the bid and ask, but only on a thinly traded stock. Usually its the professional traders that push those numbers around by having something on the order book inside the limits.

Answer 2

There is a market maker for every stock. The bid is what the market maker is willing to buy the stock for. The sell is what the market maker is willing to sell the stock for. It is called the stread. For stocks that are not so actively traded, such as pink sheet stocks the bid will be significantly more than 0.01. It may be 0.10 or even more. In the bond market the difference between the bid and ask and be several dollars per bond.

Now if you place a bid to buy or an ask to sell price, your bid or your ask may or may not get executed. The market fluctuates considerably and the bids/asks continutally change.

Answer 3

Stocks are labeled as Buy when it is felt the current price is low and expected to go up at some point. It's labeled Sell if it is felt the stock price may be over valued or some internal issue and expected to drop. When you sell someone else may not immediately buy it. Your really selling it back to the company and they are obligated to pay you what it's worth.. through brokers. It hurts a company when something happens to cause a lot of their stock to be sold. This can create a run on selling the stock which can cause the price to plummet, which means they're getting less operating capital. If it's a strong company and starts to recover, that's the time to buy and the cycle starts all over. Anticipating the peaks and valleys, as well as knowing the long term stable stocks, is what investing in stocks is all about.

Answer 4

Sell is for $1.01
Bid is for $1.00

NO transaction takes place until Sell / Bid is the same.

So in thise case, either the seller takes $1.00, or the bidder offers $1.01, and that's exactly what happens in the stock market.

If the bidder now offers $1.01, maybe more sellers will sell, but they want $1.02, but no one bids $1.02, but someone bids $1.01 and then a seller decides to take $1.01, and now the price is down from $1.02 to $1.01.

When I buy or sell stock, I set a "strike price", which means that as soon as someone is ready to buy / sell at that price, my order comes into the system. The offer doesn't appear until "the price is right".

Answer 5

Buy and Sell are a market analyst's opinion of the stock. If he expects it to go higher, he says Buy. If he thinks it is going lower, then Sell. Between these, there is usually a classification of Hold, meaning keep it if you already own it, but don't buy any more.