Read? What you may not know about stocks?
More ideas from Jeff Augen
Stocks rise when buyers are more aggressive than sellers. They fall when sellers are more aggressive than buyers. Most investors mistakenly believe that stocks rise when there are more buyers than sellers. The difference is significant and it has far-reaching implications. Liquid markets always have an excess of both buyers and sellers who generate bid and ask prices. A transaction occurs when the high bid and low ask come together; either the bid is raised or the ask is lowered. A rising bid represents aggressive buying and a falling ask represents aggressive selling. Aggressive buying drives up the transaction price while aggressive selling lowers it.
Buyers and sellers can become aggressive for many different reasons. Triggers can include news about the economy, other stocks, or individual industries. Money can also flow in or out of other markets ......