I understand but I don’t. When I “sell” stocks, who am I selling to exactly? The people who are buying in that exact moment? The exchange institution? Same when I’m “buying”.
In: Economics
The following is meant to be an ELI5 – and so I’m aware that in actuality it is much more complex.
The price you see advertised is normally the most traded price i.e. the equilibrium whereby buyers and sellers agree is good value. As such, when you attempt to buy, the broker usually has this price as a default price – though you can choose to set a buy order at a different price.
So when you make the buy order, the chances that someone is trying to sell at the same time for the same price is extremely high – in which case the broker matches the buy and sell orders together. The buyers’ money goes to the seller.
Note that if trading volume for the stock as a whole is low, your buy order can just end up sitting there for hours, or even days until it is closed. This usually happens when trading stocks in very small companies.
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