| The Way The Stock Market Works. | | | | law of "supply and demand". |
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| I have come to the conclusion that the market | | | | This "Law" is taken advantage of by the large |
| is (dare I say) generally being manipulated | | | | Institutions who are well aware of what |
| influenced by firstly the large institutions, | | | | happens when they buy or sell huge volumes. |
| Secondly by full time professional traders | | | | |
| and day traders. | | | | Some Reasons Why Share Prices Go Upwards. |
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| The general public and the "Mum and Dad" | | | | It's always a good idea to look at stocks |
| investors are the last to know what is | | | | that have jumped in price to see what clues |
| actually happening and invariably the ones | | | | where there beforehand. By gaining a greater |
| that lose out in the long run. | | | | understanding of what happened before stocks |
| | | | jump in price, it can give you a better |
| The advantage the Institutions have is the | | | | chance of being on board some of the next |
| "Millions" of dollars that they have | | | | ones. |
| available to use at any given time. This is | | | | |
| usually obtained from the public in the first | | | | When the share price increases, it means that |
| place, in the form of Insurance, | | | | the buyers (on average) want to buy larger |
| Superannuation and Managed Funds etc.Which we | | | | parcels of shares. When people buy large |
| (the general public) all contribute to on a | | | | parcels of shares it generally means that |
| daily basis. | | | | they are very confident in the stock and its |
| | | | future prospects. |
| The large advantage they have is the enormous | | | | |
| amount of shares they are able to purchase at | | | | A large increase in Smart Money (Traders in |
| any given time. | | | | the know) and Buyer Demand can occur before a |
| | | | large jump in price happens. This information |
| What occurs is that even a small movement in | | | | lets you know that other people are very |
| share price means big profits for them, | | | | interested in this stock and are prepared to |
| because of the volume/turnover of shares | | | | spend big money on it. This can be another |
| which occurs whenever a share transaction | | | | good clue. |
| takes place. | | | | |
| | | | When you see large spikes in Buyer Demand |
| Now Volume is the "Fuel" driving the market. | | | | when the price is starting to rise upwards it |
| An uptrend in share price to survive and to | | | | often indicates that the stock is set for a |
| continue must be nourished by new buyers who | | | | much longer bull run. The rushes for stock |
| are being fed by cautious, seemingly | | | | are caused from either news or rumors and (as |
| reluctant sellers. | | | | long as there is no bad news) this activity |
| | | | will then start attracting attention from |
| Consistent volume is very important, if there | | | | other traders. |
| is to be any change in the existing trend. | | | | |
| There must be a surge of buyers or sellers | | | | Another great clue is to be found when |
| capable of changing the current share price. | | | | Directors are buying there own stock. It |
| | | | means that they must have confidence in their |
| Remember for every "Seller" there has to be a | | | | own company to invest money in it. You can |
| "Buyer" and vice versa. | | | | find out when Directors are buying and |
| | | | selling by checking the ASX company |
| The seller thinks or knows the share price is | | | | announcements on a daily basis. |
| going down and the buyer thinks the opposite. | | | | |
| | | | Companies are on strict instructions to |
| Now too much selling will invariably force | | | | notify the ASX when ever a Director buys or |
| the price downwards as will too much buying | | | | sell shares in his company. Directors buying |
| forces the share price upwards. This is the | | | | are usually based on a profit motive. |