What Causes Stock Price to Rise or Fall?

I get that when investors sell the stock the price of the stock goes down and vice versa... but isn't a typical investor selling the stock back to the broker dealers? AKA every time someone is selling a stock someone on the other side has to buy it?

In other words, there are a set number of shares (say for a certain time period), when someone buys a sells a stock, someone has to buy it. Why is the price dropping then?

 
Best Response

yikes......

Explanation: There is someone out there who can control the price by buying/selling a lot of shares based on the spread.....it's likely the same person telling you to buy a certain penny stock.

With illiquid penny stocks, most of which are traded OTC, the bid/ask spread is very wide, making the actual price of the stock on your PA home page look like it's swinging back and forth in seconds. This is not good for limit order traders....in fact it's really not good for anyone for that matter, and unless you're only investing a couple hundred dollars and are okay with huge risk exposure, I'd say stay away from anything that volatile.

Steve Cohen got fired once for buying just 100 shares of some penny stock off the market at his desk, people saw steve cohen bought xyz and over valued it, after a day people realized this is BS and all the people who invested in XYZ lost all their money when the price was corrected by people unloading it. Doing that kind of things isn't illegal; it's unethical, and I'm pretty sure that's how he got fired/was asked to leave from his job before he started SAC Cap.

Any ways, that's what people are likely doing to you.

 

A lot of times those trades never actually happen. Someone screwed up an order, it gets filled, then canceled.

Jack: They’re all former investment bankers who were laid off from that economic crisis that Nancy Pelosi caused. They have zero real world skills, but God they work hard. -30 Rock
 

unfortunately price graphs that also act as a company timeline is extremely difficult to find.  Usually its just been chart thats been annotated by someone, that would be tricky to program a computer to do.  If you find something please share.  Otherwise manually do your own homework.

"Oh the ladies ever tell you that you look like a fucking optical illusion" - Frank Slaughtery 25th Hour.
 

Don't get confused with the bid/ask numbers and actual trade numbers you see flying across the tape. When someone buys a stock, they either pay the ask (take liquidity) or post a bid and wait for a seller to take the bid (provide liquidity). If they pay the ask, they're paying the NBBO (national best bid offer), or simply the lowest offer on all of the exchanges.

When people are aggressively paying the offer, sellers will naturally raise their offer (unless they're trying to unload a load of crap) to get more $ for their stock.

 

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