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Humphrey D Geiseb writes:
> Why does profit -taking by institutional players forced the price of
> a stock downwards. If an institution is dumping its shares in a
> given stocks, 1 may conclude that it can only sell to an
> institutional buyer, who takes the opposite view of the trade. But
> why the heck does the price have plunge downwards.
For the same reason any price moves; supply and demand. If a large
amount of stock is to be sold, then the supply increases, and if the
demand stays the same, price lowers.
Another way of looking at it is this; if you were the buyer of
something and the seller was more interested in getting rid of
something than actually getting a particular price for it, wouldn't
you offer less for it?
If you wanted my car and I HAD to sell it (i.e. I'd take almost any
price for it), you'd be silly to offer me $100 when $30 would do,
right? A contrived example, but not inaccurate, I think.
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