when the buyer is more desperate to buy the stock and the seller is not too excited at the price being offered, the buyer ups the offer and hence the price goes up.
similarly, when the seller is more desperate to sell and get out of the stock and the buyer is not interested in the stock at that price, the seller downs the offer-price and hence the price comes down.
for every buyer there is a seller and vice-versa.
difference of opinion between people in the stock market on whether the stock price will go up or come down is a blessing. Otherwise, few will want to buy the stock if everyone believed it is going to go down; and few would want to sell the stock if everyone believed it is going to go up.
this is the reason that whenever there is division of opinion, the trend continues, and whenever their is unanimous opinion of reversal, reversal happens.
those who believe stock price is going to go up (and hence they stand in the buyers' queue) are known as bulls (bull attacks by horns resulting in upthrow), while those who believe that stock price is going to go down (and hence they stand in the sellers queue) are called bears (bear attacks by bringing the victim down).
markets never move in a straight line except in extreme situations. otherwise there is always a tussle going on between bulls and bears.
A trader can be a bull and bear at the same time. e.g. u may believe that stock ABC will move up and XYZ will move down. bulls and bear are always present in the market. they keep on having the upper hand turn by turn. when amongst the bulls, be a bull; and when amongst the bears, be a bear.
Go with the trend. Don't be a bull-fighter or a bear-wrestler...
No comments:
Post a Comment