What actually controls stock prices?

[nopeda]

When you look at "level 2" it becomes apparent: that shows what's for sale, at what prices. To give a very simplified example, if you want to buy 1,000 shares in a company, there might be 400 for sale at $28.00 and then 400 more at $28.05 and you have to take the last 200 of your order at $28.10, so the act of your buying (when the price was $28.00, or $27.98 - $28.02) has left the market with the next ones for sale now at $28.10, or perhaps $28.08 - $28.12 if you want the bid/ask shown.

I don't trade stocks myself, and my numbers might be inappropriate, but I think that example demonstrates the mechanics of why/how "demand" (better known as "buying pressure") actually increases the price at which they're available, for the next buyer after you? Does that make sense?

What you said does make sense, thank you Xela! What is level 2, and is it something we can look at somehow? Also I'm curious what you do trade since you don't trade stocks.

My example above illustrates a simplified version of a stock for sale at only one central exchange. But if they're for sale in more than one place, there are also automated trading algorithms seeking arbitrage opportunities and so on, which normalize/balance different supplies anyway.
. . .
Buying 1,000 shares in Microsoft isn't going to move the price at all, because there'll be a huge number of them for sale at the first price you can take, whereas if you want to buy 1,000 shares in a tiny mining company in some small country, that company has far fewer available in the first place, and they're not traded much, so even your 1,000 share deal will effectively raise the price a little (I'm simplifying, but you can appreciate the principle, from what I'm saying?).

I think I understand it, but still am wondering if it's the same proportionally, or whatever the appropriate term would be. The number of shares available from Microsoft is so much higher than the mining company example that they're not in the same league, but would it be the same for computer companies and mining companies etc, that have about the same number of stocks available? And is it the same in some conditions but not in others, for example maybe between manufacturers but different between manufacturers and agricultural companies or something like that?

 

[Xela]

What is level 2, and is it something we can look at somehow?

You can.

http://www.investopedia.com/articles/trading/06/level2quotes.asp

Also I'm curious what you do trade since you don't trade stocks.

Most of my previous experience has been with trading forex - from which I eventually made what most people would call a decent living for four years after longer than that learning and trying to! - but in December of last year, after very repeated advice from institutional trader friends, I finally made the "big switch" to trading futures (I now trade mostly the e-mini Nasdaq) and am now wishing I'd done this earlier, because I find it easier and better, using more or less the same methods.

Over the last 8 years, I've traded spot forex, indices, currency futures and index futures, but never individual stocks at all.

You'll get better answers to your other question from a stock trader, but I think you understand the liquidity principle correctly, anyway, in so far as it relates to dealing costs and ease/difficulty of transactions. Penny shares, because of their illiquidity, tend to be fraught with complications you'd be very well advised to avoid, at least for the moment, in my opinion.

 

[Buy1Sell2]

Do the companies control the prices at which their stocks sell, raising the price as more stocks are sold? Or does the price automatically rise as more are bought, and then go down when they are sold? Or doesn't the number of sales have anything to do with it? Or...???

It's what people are willing to pay and what people are willing to sell for. Nothing else.

 

[murray t turtle]

Do the companies control the prices at which their stocks sell, raising the price as more stocks are sold? Or does the price automatically rise as more are bought, and then go down when they are sold? Or doesn't the number of sales have anything to do with it? Or...???

Also, can you always buy and sell stock when you want to? I had been of the opinion that you could just buy and sell whenever you want, or maybe whenever the market is open. But someone mentioned something about one of the dangers of penny stocks being that you can't always get rid of them when you want to. So can you not always buy and sell when you want? And if not, what places the restrictions?

Thank you for any help understanding these things!
David

%%
Yes ;usually liquid stocks can be sold or bought @ your or my pleasure.
Jack Schwager's top traders books+ William O Neills books are helpful on stocks............................................ -Penny stocks should be avoided, they tend to trend violently to pennys,,,,,, up,,,,,,,, back to pennys, as IBD newspaper warned.Wisdom is profitable to direct- NOt a prediction.

 

[Redneck]

What actually controls stock prices?


What controls price (investing purposes)..., or what orchestrates price moving from A to B (trading purposes)


Price is controlled by fundamentals

Company issuing a dividend
Company making product(s) / providing service(s) that are needed
Company innovating
Company sound / growing
Company's product / service in vogue..., necessary..., popular
Company's earnings (not necessarily the earning's announcements as price will go either way initially)
And depending on the company - world happenings

So on / so forth (several other influences)

===================

As to what orchestrates price..., moving from A to B.., with respect to above

A whole host of players..., and dependent on - who is.., and who is not - presently active

============

Aside:

Some of the respondents to your question should have known this - makes me wonder



RN

 

[ETcallhome]

What actually controls stock prices?


What controls price (investing purposes)..., or what orchestrates price moving from A to B (trading purposes)


Price is controlled by fundamentals

Company issuing a dividend
Company making product(s) / providing service(s) that are needed
Company innovating
Company sound / growing
Company's product / service in vogue..., necessary..., popular
Company's earnings (not necessarily the earning's announcements as price will go either way initially)
And depending on the company - world happenings

So on / so forth (several other influences)

===================

As to what orchestrates price..., moving from A to B.., with respect to above

A whole host of players..., and dependent on - who is.., and who is not - presently active

============

Aside:

Some of the respondents to your question should have known this - makes me wonder



RN

don't forget, daughters finally married off, gotta do something with the money quick