how does the price move? 📖💡

23 февр. 2022 г.

The movement of the price is depending on supply and demand

What is supply?
Amount of the product or output that the seller wants to sell with the certain price
What is demand?
Amount of the product or output that the buyer wants to buy with the certain price

for a better understanding of the concept of supply and demand, let's start with a simple explanation and example for home auction and after that, we will explain more for financial markets

first scenario
one seller and more than one buyer
in this scenario, demand will surpass the supply and make competition for better and more price of buying for one product
and this competition of the increasing of the price continues till one of the buyers still be willing to buy the product with a higher price

second scenario
one buyer and more than one seller for the same product
in this term, supply surpassed the demand and make competition for the lower price of selling the same product
and this competition of decreasing the price continues tills none of the sellers be willing to sell the product with lower price

and there are some exceptions that are none of our concern

about the financial market, we are dealing with a double auction
in this term, we are dealing with more than one seller and more than one buyer of the product or output
that both groups offering the price for their desire so at the same time we have a different price for one stock and the way to have successful buy or sell position is that buyers increase their price to reach to the seller's price or sellers decrease their price to reach to buyer price
and our other option can be
that traders decide to buy or sell without any paying attention to orders, lines, and price and just wants to be entered or exit to the market
so
with every available price automatically, they reach their request

we will explain more in our next tutorial

Please, feel free to ask your question, write it in the comments below, and I will answer.🐋