Generally, the trade price of a share rises if more investors are looking to buy it, whereas, it falls if the investors start selling more of their stocks. However, an investor needs to aware that the trade price of a stock isn’t necessarily an accurate parameter to measure its value in the market.
How the trade price of a stock is derived?To understand how the trade price of a stock is derived, it’s important to understand some basic concepts of trading in stock markets. In order for a trade to occur, a buyer and a seller must meet at the same price. The price at which the buyer is interested in buying the stocks is called ‘bids’ while the price at which the seller wants to sell his/her stocks is called ‘offers’.
Bids and offers keeps on changing constantly as buyers and sellers change their minds regarding the price at which they want to sell or buy the stocks. It is the interaction between the buyers and sellers that changes the market price of a stock. When the buyers raise their bids, the market price of the stock rises, whereas when the sellers lower their offers, the market price of a stock drops.
How the trade prices of IPOs are derived?For the newly listed stocks in the stock market, better known as Initial Public Offerings (IPOs), the trade prices are mainly driven by investor’s sentiments. When the shares of a company go up for sale, the buzz and industry hype around it may drive up its market price inordinately.
However, as the IPOs does not have a trading history behind them, their initial trade prices may plummet after few weeks or months of their launch.
Where to find the trade prices of stocks?The trade price of a stock is the value of the stock mentioned in stock quotes. Trade prices of popular stocks are printed in financial sections of the newspapers and quoted in TV newscasts. Additionally, investors can quickly access the finance websites to know the current market price of the stocks along with the historic trends in market prices.
Investors can use this information to predict the fluctuations in stock prices in the future. This will help them in knowing whether they should buy or sell their stocks at current market price or wait for the prices to fall or rise further.
Click here to open an online trading and demat account.
The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.
Disadvantages of Early Retirement - What Happens When You're Not Working?
Early retirement seems to be good, many people enjoy life without working especially with extra earnings. But they are not aware about the cons. Lets explore the disadvantages of retiring early to save your retirement life.
5 Benefits of Health Insurance that Makes it a Must Have Cover
Here are the 5 benefits of health insurance that makes it a must to cover
When Should You Withdraw Money from a Mutual Fund?
In case of a sudden change in fund strategy or an underperformance scheme for more than 3-4 years, it makes sense to withdraw money.
How To Apply For Personal Loan
Applying for a personal loan has become extremely easy these days. With the increase in applicants, banks and other financial institutions have made the process very simple.