If people make money in stocks and crypto by buying low and selling high, who is buying the stocks from they are high, and why?

Question

Let’s just say for example, I bought a stock at $10. Then it goes up to $500

I can obviously make a profit, but why would someone buy it at such a high price?

Is it like the person who buys it at $500 is hoping that it will go up to $1000, then the person who buys it at $1000 hopes it will go up to $1500, and so on?

In: Economics

Answer 1

Everybody who buys and sells stock in the short term is guessing or trying to estimate when to buy and sell. Some are better at it than others, or just sometimes luckier. Lets’ say you buy at $22 and it goes up to $26, and you think ok, I will sell and make a profit. You sell, and it goes to $30. You think damn, I should have held on to it. So you have a another stock you bought at $40 and it’s gone up to $46, and you decide to hang onto it until it gets for $50; however, instead it drops suddenly to $32, and you’re afraid it will drop even lower, so you sell at a loss before that happens. So you made money on one stock, and lost money on another.