How And Why Do Stocks Move?

How and Why Do Stocks Move?

In simple terms, it comes down to a crowd. When more people are buying a stock than selling it, the price tends to move up. When more are selling than buying, it tends to move down. Every price on the screen is really just the last point where a buyer and a seller agreed.

How momentum builds

When a stock starts moving and traders notice, more of them may get involved - that's generally what's meant by momentum. The bigger the crowd, the faster the move can happen. It's worth keeping in mind that momentum can build in either direction: a fast move up and a fast move down work the same way.

Reading the trend

Many traders watch that shift in buying and selling pressure before deciding how to approach a stock. There's no way to know in advance how a trend will play out, and a stock's past momentum doesn't guarantee what happens next.

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