12 Apr Supply and demand in the stock market
Traders, good morning! What is it that really makes the price move? Do you know how the supply and demand in the stock market? All markets are moved by two forces. The supply and demand. This is the knowledge base that you must know to start investing, speculating or trading.
What makes the price move in the stock market?
Will there be more purchases than sales? When they talk about the price going up, are they buying? But to buy, someone will have to sell to me and if I want to sell, someone will have to buy from me… so are there always the same purchases as sales?
Intention is what makes the price move
If there is more desire to buy than to sell, that is what is going to make the price go up and if there is more desire to sell than to buy, that is what makes the price go down.
The demand
Demand is the intention to buy. If there is a lot of desire to buy and there is little desire to sell, that is, there is less supply, the price will rise.
A clear example is housing; If there was a lot of desire to buy and there was not so much housing, what will happen to the price of housing? It is going to go up, you are going to buy it more expensive because there is no offer at low prices, therefore the price of housing goes up.
What happened when the crisis came?
Many wanted to sell but there is no demand. Why was there no demand? Because the banks no longer gave money to be able to buy or because the buyers did not have money, then, directly, the price of housing fell because there was more supply than demand because there was much more of what they wanted to sell than of those who wanted to buy.
What moves the price?
The difference between the interest to buy or to sell. Also, every time we buy or sell the chart will show it to us through volume.
What is volume?
The volume refers to the number of contracts that have been executed during that period of time.
In the example that I give you in the video, you can see how in one minute the price of the sales contracts has dropped because there were many more people who wanted to sell than those who wanted to buy and they had to execute those sales at higher prices each time. low until they have found a match.
Is there a balance between supply and demand?
Yes. For example, it may happen that there is a lot of offer Y demand increases until it equals and they begin to execute many trades but the price does not move because they enter the counterparty.
It can also happen that the price is going down because there are many who want to sell and there are fewer cases who want to buy and until they find the counterparty the price goes down but it can also stop because the supply decreases because the sellers don’t want to sell so cheaply and they stop; no need to increase demand.
The same goes for the price when it is going up. Therefore, remember! These balance points can occur because there is an increase in the opposite force or because the supply or demand that is pressing is withdrawn and we see all this through the price.
There is no magic system in the stock market. If you know how to read the market well, you will save yourself a lot of time looking for that indicator that tells you when to invest.
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I hope you liked this video and you know, if you are not profitable with one account you will not be profitable with 5, so be very careful and risk management.
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