Hi, all, I am not a trader/investor. After reading my first beginner book, I am not convinced I want to be one. But it's all so intriguing to me, I can't stop reading about it. Who knows? I've been reading this forum for a couple of months. Great info. I also just finished reading a beginner's books on trading (Peter J. Sanders' "The Complete Idiot's Guide to Day Trading Like a pro"). I am about to read it again. The answer is probably in the book I read, but I missed it. A stock is on an uptrend, it made a nice move, but quite a few owners want to take the profit and they sell. In Rockefeller's book (a Dummies book on TA), she says, "The sellers temporarily overwhelm buyers and the price falls even the trend is still in place." My question: WHO BUYS the stock the sellers sell? How can the sellers overwhelm the buyers, if the buyers are buying the sellers' shares? Please be kind. I know this is a basic question for most of you. Thank you, Bracca
Everything is supply and demand. If there are more sellers at one price than there are buyers then the price will drop. It goes on all day long at each price level. People buy perceived value and sell perceived over value.
Not always true. If one seller sells 500000 shares and you have 20 buyers buying 100 shres the price will still drop. Hence we need to use the energy level equation.
When I say more sellers I am not talking about the number of physical people, I am talking about the number of shares.
I wondered the very same thing when I sold my first share. Now I just know someone will buy it, if not I just simply lower the asking price.
market makers provide liquidity for both sides. Depending on how they see order flow, they may step in and buy the sellers dumping. Or they may add to the selling by shorting. Either way, they are there to provide the balance that wouldn't exist if it was just pure retail sellers and buyers alone. Get familiar with market makers and their role in the markets.
Someone stepped in at the close and bought up the imbalances. Unless their is an error on my chart, it looks like intervention.
Does your question mean "how is it possible that there are more sellers in an uptrend"? Well, an uptrend won't be always straight up. There are fluctuations. Buyers will stop sometimes to take profits, therefore turning themselves into sellers. Sometimes buyers will stop for a while, letting the sellers take control, because they might be concerned that the trend is over. In a longer timeframe, it can happen that some bad news causes more people to sell, but when the effect of the news is over the trend will resume. Like the all the subprime problems now. Usually the more the trend goes up, the more you will see it becomes unstable, because at a higher price more sellers are willing to sell, and less buyers are willing to buy. If the trend is solid, buyers will eventually show up again. There are no fixed rules, otherwise everyone would be rich. That's why people look at statistics.
Hello bracca Who buys the stock:.. market makers, traders, investors,mutualfunds, hedgefunds institutional buyers, even the stock xyz can buy bac its shares and anyone who has implemented a so called black box program. how can the sellers overwelm the buyers :... supply and demand I would also reccomend as another poster you read about the role of market makers The only book iv seen about it is the market makers edge read it Best of luck with your market journey Bracca.
Thank you, Ken, and all. Very good info. I'm wondering if I should start another thread for the below. I am learning theory. What I want to do now is "watch" a few stocks/futures live in the market. But I cannot do this at my full time job. So I'd love to do it at night: watch a stock or a e-mini future for a few weeks running at maybe 2x or 5x speeds. So the answer is software with playback capability, it seems. I did a search here on ET and Ensign came up quite a bit. I downloaded the trial, and am enjoying it. If anyone subscribes or knows the answer, please answer: 1. Can Ensign playback a random stock I pick, say NE? I see it plays back data for a few preselected futures from 5 days ago to 50 days ago. 2. Can I playback a stock's/future's data for the last, say, 6 months? Ensign is affordable, so I'd like to stick with it if it can do the above. If not, what are other software choices--free or comercial--for playback of any stock/future with any date range? Thank you in advance, Bracca