Stock prices move because of changes in supply and demand. It is that simple. Of course, there are thousands and thousands of factors that can affect supply and demand, but when you get right down to it, supply and demand dictate stock prices.
When you are reading the news, analyzing financial data or looking at a stock chart, you should always be asking yourself how the item you are looking at will affect supply and demand and which of the following outcomes is most likely for the stock price:
- Increasing demand typically leads to a rising stock price.
- Decreasing demand typically leads ot a falling stock price.
- Increasing supply typically leads to a falling stock price.
- Decreasing supply typically leads to a rising stock price.
Video: Why Stock Prices Move
Now that you've got the basics of why stock prices move, check out the video below and see what else you can learn about why stock prices move at the whiteboard.
