eli5: How do stock traders know when to buy and sell, is it pure guessing or is there factors that affect it?
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It depends. There are a variety of different traders who trade for different reasons and with different resources available to them. Some will be very well connected and will often have insider information about things going on inside companies, governments, etc. that has not been made public yet. It’s generally illegal to trade on the basis of insider information, but this isn’t really enforced that well. Other traders have developed models that they think will enable them to predict things better than other traders, or have IT setups that they think will enable them to react to events more quickly.
There are also people who do arbitrage, in which they make a combination of trades at the same time that are almost guaranteed to make a profit (e.g. they might buy something on one market and sell something that’s essentially equivalent on a different market for a slightly higher price). This isn’t easy to do, but there are companies and traders who specialise in it. And there are businesses that use financial markets as part of a hedging strategy. For example, they might be worried about some particular eventuality (say, a rise in oil prices) that will harm their business, so they make investments that will be profitable in that circumstance (say, buying oil company shares).
And there are also plenty of people who have no idea what they are doing and essentially buy and sell things at random. Since they are competing against the people who do know what they are doing, they are likely to make a loss.
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