Let us talk about all the topics with examples that make you understand the concept more easily.
DEMAND AND SUPPLY
Let me explain this topic with an example of a photo of MonaLisa's painting.
When we take this painting, we all know that there is only one original Monalisa painting in the world. We have decided to sell this portrait and conduct a public sale and a minimum amount. Let's take the minimum amount is 2000 dollars. Once people start bid the painting, the price of the painting keeps going up. We have only one painting ( less supply ), and demand increases when many people are ready to buy it. That is, Fewer products, but Higher demand automatically Price Increases.
Another case,
Here a seller puts on a sale of many paintings. He has a high supply of paintings, and they are easily available in another place at a cheaper rate. But the demand for the paintings is less, so the price of the paintings goes down. That is, More products, but Lesser demand automatically Price Decreases.
This is the same to be applied in Share Market that, If the Product is less and demand is high the price Increases. In another case, If the Product is more and demand is low, the price decreases.
BID, ASK, AND SPREAD
Now we are rolling on to the next topic, Bid, Ask, and Spread.
BID - This is the price asked by the person who wants to buy a particular company's stock.
ASK - This is the price set by the seller of the stock.
SPREAD - This is the price between the BID and ASK prices.
For example, If you BID a company stock for $1 and sellers ask for $1.5, the price between $1 and $1.5 is spread.
Note: If the spread price is less, this indicates that the stock is trading very well in the market and is an outstanding stock.
SARE PRICE DEPENDS ON NEWS
Day to day life of a common person will be partly influenced by daily news. So this news is also
a reason for the increase and decrease in the share price.
For example, there is a piece of bad news going about Coca-Cola on TV. The shareholders of Coca-Cola decided to sell their Coca-Cola stocks. The actual price of the stock might be $100. But due to this bad news on TV, the buyer would ask for $80. So, this results in a decrease in the stock price of the company.
When the news channels change their news and turn up well, the scenario will change where the Sellers would sell the stock for $120 and more and won't sell it less; on the other side, the buyer will bid the price nearer to the seller's price since it is an outstanding stock.
Even though these things influence the stock price, holding stock is more important than selling it once you get a little profit than you invested.
That's all for today, guys. For more such information about the stock market and strategies, do follow me. See you all soon.
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