Every day, without fail, stocks rise and fall. The main reason for movements in a company’s stock price is due to supply and demand. Stocks go up because more people want to buy than sell. When this happens they begin to bid higher prices than the stock has been currently trading. On the other side of the same coin, stocks go down because more people want to sell than buy. In order to quickly sell their shares, they are willing to accept a lower price.
While these movements may seem mysterious, they often spring from concrete causes. Investors savvy enough to spot these driving forces may also suss out excellent opportunities to profit.
Basically, every stock trades at the latest price at which someone was willing to sell it, and at which someone else was willing to buy it. That willingness fluctuates depending on the people involved, the circumstances around the company, and even basic human psychology.
The most obvious reason that a stock goes up or down has to do with how much money the corporation makes. If a company is making money or might make money in the future, more people will buy shares of its stock. The name of the game is supply and demand. Because of supply and demand, when there are more buyers than sellers, the stock price will go up. If there are more sellers than buyers, the stock price will go down.
Often stocks go up or down based primarily on people's perceptions. This is why so many corporations spend a lot of money on advertising and on actions that will bring them positive publicity. This is also why some shareholders send out emails to strangers or post messages in Internet chat rooms to try to convince people to buy more stock.
Stocks also go up or down depending on the mood of the country and the state of the economy. Once again, a lot is based on perception. If people believe that economic conditions are improving and the country is on the right track, they will be more inclined to invest in the stock market.
A share price goes up when…
While these movements may seem mysterious, they often spring from concrete causes. Investors savvy enough to spot these driving forces may also suss out excellent opportunities to profit.
Basically, every stock trades at the latest price at which someone was willing to sell it, and at which someone else was willing to buy it. That willingness fluctuates depending on the people involved, the circumstances around the company, and even basic human psychology.
The most obvious reason that a stock goes up or down has to do with how much money the corporation makes. If a company is making money or might make money in the future, more people will buy shares of its stock. The name of the game is supply and demand. Because of supply and demand, when there are more buyers than sellers, the stock price will go up. If there are more sellers than buyers, the stock price will go down.
Often stocks go up or down based primarily on people's perceptions. This is why so many corporations spend a lot of money on advertising and on actions that will bring them positive publicity. This is also why some shareholders send out emails to strangers or post messages in Internet chat rooms to try to convince people to buy more stock.
Stocks also go up or down depending on the mood of the country and the state of the economy. Once again, a lot is based on perception. If people believe that economic conditions are improving and the country is on the right track, they will be more inclined to invest in the stock market.
A share price goes up when…
- A company is making huge profits.
- Lots of people want to buy the shares to reap the rewards of the profits.
- Not many people want to sell the shares.
- There are not many shares left.
- A company makes some losses.
- Lots of people want to sell the shares.
- Not many people want to buy the shares.
- There are too many shares.
