The thing is, if the stock is priced at $20 and there are more potential buyers than sellers, then they will bid the price of the stock up, and vice versa.
The price of a share is determined by orders placed on the order book not necessarily the trades. Let's say the share price is 45-50. This means there are orders on the order book from people who want to sell at 50 and people who want to buy at 45 (stalemate). So I come along and put in an order to buy at 55. If there are enough shares at 50 to cover my order the price may go down . If not the price will go up to my bid 55. Also Market Makers know traders who want to buy or sell at certain levels. In the above example the MMs may know buyers in size at up to 60. They will take out the 50 asks and maybe any further orders up to 59 making as profit the difference between 60 and the price they pay.
It is all down to supply and demand but it happens in all sorts of ways--the market ain't simple!
It is best to have a look at a Level2 Order Book to get the idea.
Say I am selling a second-hand car. I advertise it for $5000. There is going to be as many sellers as buyers (one) but initially there is only suppl and no demand. So I advertise the car to increase demand. Someone comes and offers $4000. So the price is sort of 4000 bid and 5000 ask with supply and demand equal. I say no and look for more demand. No one appears so I go back to that guy and say OK I will sell it to you at $4000. But he knows I can't sell it so he says he has had second thoughts but would help me out by offering $3000. OK, I agree. As I say it is stupid saying that for every buyer there is a seller. It's all about price (and usually size in stocks and shares).
Let's say there is a large shareholder who holds 500,000 shares and he puts in an order to sell 100,000. There are lots of small buyers who want roughly 1000 shares each. This may take sometime to sell the 100,000 and there is always the possibility that when done the seller may put up another 100,000 sell order. The share price would probably go down.
It is all "supply" and "demand". More demand, higher prices.
An investor has an amount of money that has to be "invested" somewhere - stocks, bonds, real estate, gold, lottery tickets, beanie babies - something.
When looking at "stocks" an investor tries to figure which "stock" will appreciate more in the coming months. History has proven the average investor has a very poor record at picking stocks.
Why?
The "average investor" has limited information. So rather than wasting time on research and study, they buy based on "gut feeling", tips from their barber or prayer. All three are detrimental to their investment portfolio.
stock prices vary on the demand (people want to buy) for the stock
google stock was $10 a share a couple years ago, but people demanded to buy the stock, it is over $1000 a share now
look at yahoo finance and put in goog (for google) to see their chart to identify what I'm talking about here
yes- if more people sell rather then buy the price of the stock will go down-if more peole buy then sell the price will go up. most of the time if profits go up the stock will go up because people will want to buy a stock that is increasing profits.
Does the buying and selling of shares do anything to the price of the stock? Or does that just change the popularity trends of the stock?
Are stocks gains and loses only based on the profit/sales by the company?
