The stock prices varies a lot within a day – Who is behind this to change the price of stocks and share value ?
Does it happens as demand – supply process..If so, how it works?
Works strictly through supply and demand.
On What basis the stock prices are fixed?
November 27, 2008 By 2 Comments
Works strictly through supply and demand.
References :
It is pure supply and demand. Some people want to sell, usually at some price or higher. Others want to buy but at some price or lower. All of them place orders with their brokers and the bid and ask prices get posted for everybody to see.
In theory the two are separated by some amount, sort of standing there, looking across a fence, waiting for a seller to offer a lower price or a buyer to offer a higher price. Something may trigger someone to decide to lower their ask price or raise their bid price. When the two prices match, a trade takes place and you see a new "Last Trade" amount.
Because there are thousands of people doing it every second the price changes seem to be flowing around but actually there is this "across the fence", "meet my price" mentality.
Of course there is another factor. Many people make up their mind during the day (or over last night) that they want to own a particular stock or if they hold the stock, they decide they want to sell it. They will place a market order which means, "I'll buy it at what ever is the lowest price available" or "I'll sell it at the highest price available". They are sort of jumping the fence. When their order goes in it is matched with the nearest offered price and the exchange of stock goes through and the price is listed as the "Last Trade" amount..
References :