Stocks related question?

Question

Ok, I hear all the time that the price of "x" stock has lowered a lot because of a big sell off, because everybody that day decided to sell their stocks of that particular company. Well I don't understand this because if a lot o people sold their stock, well also a lot of people bought that stock (from all the sellers). And I also hear as well that a stock price goes up because a lot of them were bought, but at the same time a lot of them were sold (to the buyers). I don't get this, please help.

Thanx for your response, I appreciate it!

Answer 1

Stocks go down if there are currently more sellers than buyers. It is at lower prices that the buyers come in to buy the seller's stock. Hence the decline in the price.

Answer 2

Stocks go down when everyone wants to get rid of them and no one wants to buy them. When people are lining up to buy a certain stock, it goes up. Headlines affect the s/d and the stock value.

Answer 3

Supply and demand.

Answer 4

Look at it this way.  Lets say 3 people want to sell a widget.  Going price for a widget is 10 dollars.  There are 2 buyers and all 3 people want to sell their widgets as fast as possible.    So one guy decides he will sell his widget for 9 dollars because at 10 dollars he might not get a buyer.  The first buyer jumps at the chance to get a discount widget.  The other two sellers now know that the the next buyer will want to buy for a similar price so one buyer will try to undercut the other buyers "asking" price in order to sell first.  Meanwhile about another 5 widget owners see that their widgets are becoming worth less and less so they jump on board trying to sell their widgets too.  There are so many sellers now the price is going lower and lower as each seller tries to undercut the next.  Meanwhile on the buyers side, a few more buyers are coming along saying to themselves..."look at these fools...selling 10 dollar widgets for 8 to 9 dollars and they start buying at that price.  Other buyers then see this and see the price of widgets start going up to 8.50 then 8.60 then past 9 and they say...hey I better get me some of the widgets too before they go back to 10 bucks a widget.  Then that pushes the price back up.  Thats basically the stock market in a nutshell

Answer 5

It depends on how many sellers are there relative to buyers, their willingness to sell (get rid of) relative to the willingness of buyers to buy, and how attractive the stock (or product) is compared to its current price.

Imagine that you would like to buy an iPod, that currenlty cost $200, by you dispose of only $100. Imagine that there are 100 people like you. Then imagine that Apple has sold iPods to all people that can afford to do so.

Imagine that a new version of iPods is coming and Apple wants to get rid of old 200 ones still in stock. Even if there are people who are willing to buy iPod, they dont do so, either because they don't have enough money or because they know that if they wait a little bit, they can buy a new version for the same price. Apple in this case will have to lower the price to $100 in order to attract you and the other 100 people to buy. Then it might lowered it further to $75, so that people who bought the first one, may be convinced to buy a sencond one for their children for example.

The price is a regulating machine for demand and supply. You are not willing or able to buy the same quantity of coke when the price is $2, $1.50, $1 or 50 cents.

The price can sometimes differ from how much a stock is worth. A stock is trading at $50 now, because everybody is expecting that the company will be making the equivalent of that price in future profits over the next quarters. If it turns out that that the company made a loss instead, it means that the stock is not worth $50 but only $40 for example. Nobody will be interested in buying the stock from someone currently holding it at $50. For the stockholder to be able to sell it, they need to reduce the price as close to $40. At that time, buyers will be interested to buy as price reflects the value of the stock now.

Answer 6

Stocks work just like any other commodity...the law of supply and demand.  If demand for a stock is low, and there are more people looking to sell, then the price will go down, since there are few people willing to buy it.  They will place their bids at continually low prices because they recognize that there are a lot of sellers.  Therefore, the price goes down.  You see, there is only a fixed number of shares in a company available at any given time.  A company needs to go through a filing process with the SEC to issue new stock, and that takes time.  

On the other hand, if there is a lot of demand for a stock, the price will rise because people will not be willing to sell their shares at a low price.  As the demand rises, the offer prices to sell will rise.  

Hope this helps!

Scott Cole

www.kungfutrader.com

www.theultimatestocktradingsystem.com