Stock Market Analysis
Stock market
To understand more deeply, let’s take an example. Suppose X company is experiencing some issues and its shares have dropped to Rs. 4000 from Rs. 5500. Assume there are two traders:
T1 and T2.
T1 says:
The stock prices of X company will go down because there are many internal issues that the company is facing.
Hence, T2 should be a seller of X company’s stocks.
T2 says:
The stock prices of X company will again go high. Currently, the company is going through internal issues but soon they’ll be resolved.
Hence, T2 should be the buyer of X company’s stocks.
Both the traders will place their orders to sell and buy stocks respectively via stock brokers who are responsible for routing the orders to stock exchange. Stock exchange ensures the trade is being executed smoothly.
Thus, we conclude that the primary goal of stock market is to create a virtual market place for trading.
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