Beginner questions - what influences the rise and fall of...

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Old Apr 14, 2012, 8:19am   #8
 
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Re: Beginner questions - what influences the rise and fall of...

as long as there are both buyers and sellers at the quote then the price will remain fairly stable

when one side or the other dries up then the price will move to where there are both buyers and sellers again

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Old Apr 14, 2012, 9:07am   #9
 
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Re: Beginner questions - what influences the rise and fall of...

Quote:
Originally Posted by Shakone View Post
Not really a misconception, rather a different way of viewing things.

If there are a vast majority (in money terms rather than in terms of people) urgent to buy, and very few willing to sell (less urgent), then the price will rise. Put another way, there was more buying pressure, than selling.

You state that buying doesn't cause price to move. So if you see a list of bids and asks, several levels deep, and someone buys up all the asks on that depth and wants to buy more, are you saying the price doesn't move? Did the buying not cause price to move then?

'For every buyer there must be a seller'. Well for every traded contract there must be a buyer and a seller. But that's not that same statement, at least to me.
I think Choc is trying to get Vielgeld to think about the mechanics of why price changes, how and why liquidity is provided, what happens when that liquidity is consumed, how different order types play a part, you know, the mechanisms that contribute to the continuous auction process.

As Vielgeld trades FX pairs off charts, he is not likely to appreciate the driving forces in the same way that others who use the DOM/T&S are used to.

@Charlie7 - it is difficult to know exactly why price moves around the way it does. However if you have a LOT of money at your disposal, you can engineer situations in the market on a particular security and profit at the expense of the ill-informed.

It ultimately boils down to where as a participant, you think value is in relation to the future and it's generally easier as a retail trader to follow the money rather than think you know what institutional money is going to do.
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Last edited by robster970; Apr 14, 2012 at 9:16am.
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Old Apr 14, 2012, 10:23am   #10
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Re: Beginner questions - what influences the rise and fall of...

Don't know about this stock.....but on the big stocks there are often short sellers.
So...When bad news comes out, prices drop and short sellers might want to close out their trade, to do this they have to buy back the shares.
Their action is often what drives shares up after a plunge.
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Old Apr 14, 2012, 10:39am   #11
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Re: Beginner questions - what influences the rise and fall of...

Hi charlie7.

You have posed a completely rational question in the western and scientific traditions. You have observed something happening and wish to rationalise why it does so.

But beware. The objective here is to make money, and more profit is better than less. Will understanding more about share prices make more profit or will being a better observer?
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