Who buys your stock when the market drops?

Question

This might seems like a dumb question, but I have always been curious about it. Say you own shares in Acme Tech. The shares plunge from $50 to $30 and news reports do not look good. If you decide to sell, what does that mean? There is someone willing to buy the stock at 30 or 30 was the last price from the latest sale?
If someone has put in a bid for 1,000 shares at 30, does that set the price? But what if several of us decide to sell 30,000 shares at once. How does this work? We might think we are going to get 30, but we only get 10 if we sell at market prices.
I heard in some cases, especially for small numbers of shares, the actual brokerage house will buy the shares and lump them together with other shares or something like that.
I would imagine many investors would be interested in the actual details of how this works......what is the best way to get rid of a stock that is declining and how does this work?

Answer 1

Good question.

I don't think you can ever get a complete picture because the market is so dynamic, but here are some possibilities:

1) There are usually limit buy orders below the market. Sometimes the market moves faster than investors can act so these limit orders get filled before investors can cancel them.
2) Pride of opinion. People hate to admit they are wrong, and argue with the market. First, they watch the stock go from $30 to $50 before they decide to buy. When it drops right after they bot (they hate to admit/believe they bot at the top), they start averaging down.
3) Market makers/specialists. They are usually on both sides of the transaction. Sometimes they have to take in some excess stock, but usually they have a bid and ask out at the same time. They buy from the seller and immediately resell for a teeny profit.
4) Value funds, bargain hunters, contrarians, etc.

Answer 2

The price in the news is the most recent trade. If something is falling quickly, you might not be able to get this.

If someone puts in a bid for 1000 shares at 29.95 and that's the best bid out there, then the first 1000 shares of market sell orders will be filled at that price. The next sell order will be matched to the next best bid (assuming no new bids come in while this is going on).

The people buying it at any price are the ones who think it's a good deal at that price.

Answer 3

If you are selling you might enter a limit order with minimum selling price. This is your "ask" price. If you are buying, you might enter a limit order with a "bid" price.

If the bid and ask prices match, the trade is transacted. If the bid is a little higher than the ask, then it is more complicated. A computer or floor trader perhaps splits the difference (I'm not sure).

If a trader places a "market order" to buy or sell, then either the computer or floor trader says, "Hey, some dumb schmoe just placed an order & he does care about the price. Let's stick it to him!"

Answer 4

The same investors that sell your stock, when you purchase it, are the ones who buy it from you when you sell. There are floor traders as well as computer programs that set the current pricing. The more a stock is wanted, the higher its price, and vice verse, supply and demand.

Answer 5

Stocks are a commodity driven by supply and demand. When demand exceeds supply, the price will go up. When there are more sellers than buyers, the price goes down until more sellers appear.

Answer 6

Price is set by demand and supply. If supply is larger than demand, then price will likely to fall. If demand is larger than supply, price will likely to rise.

Answer 7

They saying between 7500 to 8000.. More blood to shen I think...

Answer 8

Keep it simple...only because they believe [based on personal knowledge, or insight or recommendation that it will go up....

Answer 9

exactly