What causes stocks to go up and down?

Answer 1

The stock market is an organized exchange where stocks of many companies are bought/sold by investors/traders using a common platform.

The prices of the stocks that are part of an exchange determine the value of that Stock Market index. When the prices of majority of the stocks that are part of the index go up, the stock market goes up.

The price of a stock is determined by a variety of factors like, the global economic scenario, the performance of the company, recent profit margins, management decisions etc.

Answer 2

The stock market is a very intricate work in progress. Agents of different entities are on the actual market floor bidding on stocks and bonds daily. As the day comes to a close the stocks have and ending price. Stocks and bonds are based on that price during that particular day for selling and purchasing.

Answer 3

Stock prices like many other things related to the economy are based on supply and demand. As more buyers enter the market they begin exhausting the number of shares for sale. As the sellers willing to sell at lower prices are bought out the price begins to move higher looking for an equalibrium. The price will continue to move up until it has reached a price that buyers are unwilling to pay. At this point stocks may begin to move down. This occures when there are more shares for sale than buyers are willing to purchase. Sellers will lower their price in hopes to find a buyer. There are many factors that might lead to increased buyers or sellers of a particular security. Some of these include, news related to a stock, earnings reports, large purchases or sales of a stock by a particular investor or fund, news effecting entire markets, mergers or aquisitions, and a variety of other factors.

Answer 4

It depends on the ratio of buying to selling in stocks. If more people are buying than selling most of the stocks in any index, then the index goes up. If more are being sold than bought, then the index goes down

Answer 5

The concept behind how the stock market works is pretty simple. Operating much like an auction house, the stock market enables buyers and sellers to negotiate prices and make trades.

Investors can then buy and sell these stocks among themselves, and the exchange tracks the supply and demand of each listed stock.

That supply and demand help determine the price for each security, or the levels at which stock market participants — investors and traders — are willing to buy or sell.

Buyers offer a “bid,” or the highest amount they’re willing to pay, which is usually lower than the amount sellers “ask” for in exchange. This difference is called the bid-ask spread. For a trade to occur, a buyer needs to increase his price or a seller needs to decrease hers.

Share market works in the following order:

1. A company gets listed in the primary market through an IPO.

2. Shares get distriuted in the Secondary Market

3. The stocks issued can be traded by the investors in the secondary market.

4. Stock brokers and brokerage firms are entities registered with the stock exchange which offers you to buy particular share at said price

5. Your broker passes on your buy order to the exchange, which searches for a sell order for the same share.

6. The process takes T+2 days i.e. you will get your shares deposited in your demat account in two working days.

The stock market is one of the largest avenues for investment. As many as Rs. 6 lakh crore-worth stocks have been traded in the two stock exchanges in India on some occasions. Stock market investing is often called a gamble. It would cease to be a gamble if you understood the basics of the share market.

But before starting, you might want to get acquainted with a few market-related concepts.

HOW SHARE MARKET WORKS:

In the previous section, you were introduced to the different market participants and other share market basics. Let’s try to stitch these narratives together and understand how the stock market works.

This all may sound complicated, but computer algorithms generally do most of price-setting calculations. When buying stock, you’ll see the bid, ask, and bid-ask spread on your broker's website, but in many cases, the difference will be pennies, and won’t be of much concern for beginner and long-term investors.

Answer 6

The first stock market was the London stock exchange which started in a coffee house. The first exchange in the United States began in Philadelphia. The “Buttonwood Agreement” named because it was signed under a buttonwood tree, marked the beginning of Wall Street back in 1792. The agreement was signed by 24 Traders and was the first American organization to trade securities. In 1817 they renamed their venture to New York Stock and Exchange.

In the United State stock market is regulated by the Securities and Exchange Commission (SEC). Many countries have stock markets and each one should well regulate by local financial authorities. And those institutions should work independently of the government and without any political pressure to keep investors safe. Stock exchanges set certain requirements for companies such as mandating timely quarterly report (10-Q) filing, annual report filing (10-k), and corporate disclosures.

Stock markets provide a well-secure and regulated environment for market participants. The stock market acts as a primary and secondary market.

Primary market

In primary market allow companies to issue their shares to the general public for the first time through a process called an Initial public offering (IPO). Keep in mind primary market is the place where securities are created. An initial public offering occurs when a company issues its stocks to the public for the first time.