Date: August 11, 2017
As mentioned earlier, an investor’s profit comes from the difference of a stock’s selling and buying price. So what exactly affect a stock’s price in the market? The mechanism of demand and supply, of course. When more people want to buy a particular stock, its price will rise. The opposite happens when more people will like to sell a stock. Stock prices fluctuate every day.
This simple economic concept may sound easy to comprehend, but understanding the reasons behind people’s behaviours can be a difficult task, That said, the principal theory is that the price movement of a stock indicates what investors feel a company is worth – or the value of a company – not by the given stock price. This perceived value could be altered by a company’s profits or earnings, or a country’s political stability, among others.
