How or why do stock prices change and who changes them? Is it an automated system that raises prices if people keep buying and vice versa?
In: Economics
Think of stocks as candy. The stock market is a candy store. People with candy to sell and people who want to buy candy both go to the candy store. There are price lists on the wall, but the prices are negotiable.
Let’s say you you want to buy chewing gum. Inside the candy store, you find someone with exactly the chewing gum you like. If you are all alone in the store that day, the seller might agree to lower the price. This lower price then becomes the new price.
If there are lots of people wanting to buy the exact same candy as you, maybe someone will offer to pay more. This highet price is now the new price, at least until it slows down again.
Remember, only rich people are allowed into the candy store, people with money and people with candy to sell. Most people don’t have money or candy to sell. That’s because we have decided they don’t deserve it. Knowing not everyone gets to have candy makes it taste better.
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