Re: Buying vs Selling Volumes
Something I think thats somewhat simple but should be added to this thread especially because it is located in the beginner lounge.
"More buyers than sellers"
"Volume of 100 means that a buyer and seller exchanged 100 shares"
"Buyers and sellers have to be equal"
In reverse order #3, and #2- that is correct.
#1 is also correct and why stocks move up or down in the simplest form. But with an explanation.
Someone mentioned that if 100 apples were sold at a farm and the farmer was the seller, then whoever bought them would be the buyer.
There are two parties period. If No One wants to buy, no sale even though in theory the farmer has already placed a limit order to sell his apples.
But the variable with trading is that market makers or specialist put up their own capital and are a 3rd person in the room sort of speak.
So if the person walks into the farm and wants to buy apples but the farmer declines, the market maker would step in and take the other side.
The market makers and specialist set the price largely based on supply and demand. In other words, they try and find a price where buyers and sellers will want to meet and trade.
So in the "more buyers than sellers" comment- yes you can have more buyers than sellers where traders, funds, whoever want to buy but no one is selling, the 3rd party steps in to take the other side of the trade. Since no one is selling and they are taking the risk, they will raise prices to whatever level in order for buyers and sellers to meet again.
Don't want to turn this comment into a debate about market makers etc- but since this is in the beginners lounge wanted to make that distinction.
Hope that helps a bit. Rather than give a complex exchange process description tried to keep it simple