Why Stock Price Should Be Supply And Demand

1222 WordsMay 30, 20165 Pages
When observing a stock, you may look one day and notice its trading price, but then look at the same stock the following day and wonder why there was such a sudden change within this price. An important fact to remember is that all stocks are subject to fluctuations and no stock price should ever be viewed as a constant value. With this being said, what are the actual factors which will lead to a stock price changing? There may not be one definitive answer to this question, but instead multiple reasons why a stock price could either increase or decrease in price. The first place to look when trying to determine what effects a stock price should be supply and demand. If demand is high for any given stock, this means that there is a large market for it. When demand is higher, the stock price will directly increase as price as well. Just like anything in the world, if an item or service is a hot commodity, a seller would be able to push up the price fully knowing the buyer would be willing to pay the price. This concept remains the same when looking at the stock market, so just as high demand would increase stock price, low demand would cause a stock price to suffer. Low demand in the stock market can be defined as an abundance of people within the market looking to sell the same share rather than buying it. The next question would be what causes an investor to either want to buy or sell a share within a certain company? A lot of the time this directly correlates to

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