Beginner’s basics: How do stock prices move?

by khalid on 04/10/2011 · 1 comment

Every day we see the stock markets and observe some or the other movement at both the index as well as individual stock levels. Most of who are unaware of the basic reasoning behind a stock price’s movement get confused and in the end leave the matter without thinking over the primary reason.

The price movement can be related to the basic economics of a service or a product depending on the demand and supply of it in the market. Thus in case there are more people to buy a stock than number of people wanting to sell results in increase in prices of the stock whereas less of buyers and more of sellers would surely result in decrease of the price of a stock.

Understanding this demand and supply may be easy but figuring out the reason for people willing to buy or sell more of a stock at a single time. This comes down to the various factors and news related to the particular stock which may be positive or negative and result in the increase or decrease of the stock prices. Every investor has a set of principles and strategies through which they decide of investing or liquidating a stock.

Therefore when favourable news comes in for a company be it a fresh set of acquisitions or expansion plans of a company or it may be higher earnings announcement the stock prices have the tendency to move up. It’s all on the demand and supply for a particular stock that indicates the movement of a stock.

Bell the bull says: Learning about the price movements of a stock can be much easier when proper trends of demand and supply is observed.

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