Like if I try to sell an old couch on marketplace, there’s no guarantee someone will buy it. This is the first part of my question, what if no one wants the stock they’re selling? Can they just sell it to the ‘stockmarket’ or do they actually have to find a buyer like a specific bank or person that will buy it?
Then when I sell a couch, I can pick the price I want to sell it for, and maybe go back and forth with the buyer. As I understand though stocks have a specific price every moment, and you sell it for whatever the current price is. What if it’s an in demand stock though? Couldn’t you sell it for above whatever the current market price is?
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> what if no one wants the stock they’re selling?
Then it sits on the market for sale and no one buys it. This is often a problem for penny stocks, Crypto shitcoins or just anything without much trade volume (amount of it bought/sold over time).
> Can they just sell it to the ‘stockmarket’ or do they actually have to find a buyer like a specific bank or person that will buy it?
Specific assets might have institutional backers who you can always sell to. For example if a company wants to guarantee their shares will always be worth at least $100, they can pledge to always purchase them for at least $100. But generally this is not the case, buyers are not guaranteed to be there and its up to your stock broker to find a buyer when you want to sell.
> What if it’s an in demand stock though? Couldn’t you sell it for above whatever the current market price is?
If its an in-demand stock then chances are good trading volume is high, so the price of the stock is well established as lots of people are already buying/selling it.
You could offer to sell yours at above the current market price, just its not going to sell unless the market decides that price is now reasonable.
> what if no one wants the stock they’re selling?
Then it sits on the market for sale and no one buys it. This is often a problem for penny stocks, Crypto shitcoins or just anything without much trade volume (amount of it bought/sold over time).
> Can they just sell it to the ‘stockmarket’ or do they actually have to find a buyer like a specific bank or person that will buy it?
Specific assets might have institutional backers who you can always sell to. For example if a company wants to guarantee their shares will always be worth at least $100, they can pledge to always purchase them for at least $100. But generally this is not the case, buyers are not guaranteed to be there and its up to your stock broker to find a buyer when you want to sell.
> What if it’s an in demand stock though? Couldn’t you sell it for above whatever the current market price is?
If its an in-demand stock then chances are good trading volume is high, so the price of the stock is well established as lots of people are already buying/selling it.
You could offer to sell yours at above the current market price, just its not going to sell unless the market decides that price is now reasonable.
A sell order isn’t fulfilled automatically – it is instead fulfilled by a buy order offering to buy for the same price. The “stock-market” is a market of traders, and so connects traders together – just like an actual stall market.
>As I understand though stocks have a specific price every moment, and you sell it for whatever the current price is.
Not really. In stock-trading apps, you can either “one-click” sell, which places a sell order at the market price – or you can place a sell order at an alternative price. You can either select the price as advertised, or put in an alternative buy order or sell
>What if it’s an in demand stock though? Couldn’t you sell it for above whatever the current market price is?
Market price of stocks attempt to balance out the expected *future* value of the company – whereby buyers take it in the hope it will rise in the future. Any high demand for a stock is already “built-in” to the current market price.
Selling a stock for above the average market price just makes your selling price less competitive. By definitions there’s already cheaper prices out there whereby the buyer would make a larger profit.
The primary difference in your analogy is that the stock market is generally very very liquid. There’s many players that “make a market”, meaning provide both offers to buy and offers to sell, with a relatively narrow spread (ie the difference between what they are willing to sell for and what they are willing to buy for is on the order of a penny). Additionally, many players that will do a lot of work to figure out what the “right price” is, and will make bets until the market reflects that price (ie if the current buy/sell is around 100$, but players believe it should be 101$, they will quickly trade until the buy/sell becomes 101$).
These mechanics mean that traders have a relatively easy time getting trades through. For example if I wanted to buy immediately and I see the market price is fair, I can just pay 101.01$ per share and get immediate trades. That trade indeed happens publicly, on the “stock market” (actually stock exchange); but you are usually trading with at least one real entity on the other side (ie someone has agreed ahead of time to sell you for 101.01$). The purpose of the stock exchange is to aggregate and match up these various players with different ideas, business goals, and urgencies around their trades.
To your second question – if a stock is particularly in demand, this will reflect in two ways: many more offers to buy than offers to sell; and immediate execution of orders that offer higher than mid price, thus pushing mid price up. Either way, the market absorbs the belief or idea that the stock is “in demand” or “underpriced”. So unless you are particularly fast on the draw, you won’t be able to profit from holding this view.
A sell order isn’t fulfilled automatically – it is instead fulfilled by a buy order offering to buy for the same price. The “stock-market” is a market of traders, and so connects traders together – just like an actual stall market.
>As I understand though stocks have a specific price every moment, and you sell it for whatever the current price is.
Not really. In stock-trading apps, you can either “one-click” sell, which places a sell order at the market price – or you can place a sell order at an alternative price. You can either select the price as advertised, or put in an alternative buy order or sell
>What if it’s an in demand stock though? Couldn’t you sell it for above whatever the current market price is?
Market price of stocks attempt to balance out the expected *future* value of the company – whereby buyers take it in the hope it will rise in the future. Any high demand for a stock is already “built-in” to the current market price.
Selling a stock for above the average market price just makes your selling price less competitive. By definitions there’s already cheaper prices out there whereby the buyer would make a larger profit.
The primary difference in your analogy is that the stock market is generally very very liquid. There’s many players that “make a market”, meaning provide both offers to buy and offers to sell, with a relatively narrow spread (ie the difference between what they are willing to sell for and what they are willing to buy for is on the order of a penny). Additionally, many players that will do a lot of work to figure out what the “right price” is, and will make bets until the market reflects that price (ie if the current buy/sell is around 100$, but players believe it should be 101$, they will quickly trade until the buy/sell becomes 101$).
These mechanics mean that traders have a relatively easy time getting trades through. For example if I wanted to buy immediately and I see the market price is fair, I can just pay 101.01$ per share and get immediate trades. That trade indeed happens publicly, on the “stock market” (actually stock exchange); but you are usually trading with at least one real entity on the other side (ie someone has agreed ahead of time to sell you for 101.01$). The purpose of the stock exchange is to aggregate and match up these various players with different ideas, business goals, and urgencies around their trades.
To your second question – if a stock is particularly in demand, this will reflect in two ways: many more offers to buy than offers to sell; and immediate execution of orders that offer higher than mid price, thus pushing mid price up. Either way, the market absorbs the belief or idea that the stock is “in demand” or “underpriced”. So unless you are particularly fast on the draw, you won’t be able to profit from holding this view.
> Can they just sell it to the ‘stockmarket’ or do they actually have to find a buyer like a specific bank or person that will buy it?
Nope, you have to find a buyer/seller depending on what you want to do. It usually doesnt happen to big stocks since there’s so many shares, but it happens often to things like penny stocks.
> Can they just sell it to the ‘stockmarket’ or do they actually have to find a buyer like a specific bank or person that will buy it?
Nope, you have to find a buyer/seller depending on what you want to do. It usually doesnt happen to big stocks since there’s so many shares, but it happens often to things like penny stocks.
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