What is the difference between the supply and demand of shares?

When we look for information on the price of shares in specialized portals such as Bloomberg Stocks or Yahoo Finance, we only appreciate one value per share. This is called share value or quotation.

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However, that value is determined by the two great “market forces” supply and demand. Remember that in the stock market are those investors who want to sell and those who aspire to buy.
Therefore, if we look at the monitors of the stock market agents such as Nasdaq or online broker sites, we can find the so-called “screens or books of purchase-sale orders” where two types of securities can be appreciated for one share. .


There we will have two positions: first the purchase orders, who place their positions or offers in a purchase price and purchase volume and in the other position we have the sales orders with their demands or price requirements and their sales volumes.


Only when a purchase or offer order is crossed with a sales or demand order that match in value, a transaction is made and such orders leave the order book or monitor, updating the market value or the share price that is We appreciate the vast majority of users in stock charts if we are not in any of the two positions (purchase or sale).


So the price of the current price or price of a share is actually the value at which the last sale and purchase transaction was traded and in very liquid shares or securities as explained by Money.stackexchange.com can change in a matter of seconds and small differentials


Supply and demand prices can have a significant effect on the possible returns of the exchange of shares. With clarity in the terms previously stated, we present the difference between the supply and demand of shares.


Supply and demand in the stock market

When we receive the basic concepts of supply and demand in the elementary or high school, we are taught to associate the offer with availability, capacity or supply, that is, with a “sales position”, similarly we are allowed to associate the demand with a “buying position”.


However, in the stock market, technicality leads us to see the difference between supply and demand for shares from another perspective.


Those who wish to buy shares place an “offer” or purchase order for a value and a volume of purchase and those who wish to sell shares demand or “demand” a sale price over a volume and sale value.


The prices of supply and demand of shares then become a “bidirectional price offer” as cataloged Investopedia.com that suggest or point to the best price at which a value can be bought or sold at a particular time.


In other words, the offer price in the stock market is the price that a participant in the market being a broker, creator or a stock specialist is willing to pay at any given time for a given volume of a share.


While the sale price is the price for which a market participant is willing to sell the shares and is the value demanded by them. The sale price is always higher than the sale price.


The spread or spread between supply and demand prices is known as supply and demand expansion. This expansion is a cost in the negotiation of securities and should be covered to be able to close operations and achieve trading volumes.


Market orders and limited orders

Supply and demand prices will mark the levels at which an order is placed in the market, this being the fastest way to close a transaction. Securities brokerage accounts allow “limited orders” and “market orders.”


A market order is the offer made at the current sale price or demand of the sales positions of a stock.


An investor uses a limited order trying to impose the price at which a stock is going to be bought or sold. A market purchase order will be made at the sale price, and a market sale order will be made directly at the price imposed by the current offer. These are the ideal conditions for stock markets in which the largest volumes of operations are traded.


Expansion, supply and demand

Less active or less liquid stocks have expansions of 5 cents or more. Shares of the least traded can be listed with expansions of 50 cents or one dollar.


Expansions increase when market agents want to protect themselves against a sudden price movement, at which point the positions close quickly. You can check the expansion of supply and demand of a popular stock after the stock market closes.


The expansion is significantly expanded when either of the positions or both cover supply and demand prices and do not wish to be surprised when the market opens on the next trading day.


Placing a market order to buy or sell is the fastest way to complete an order in the stock market.


The order must be made in a few seconds with an online brokerage account. For stocks with a broader expansion, a limited order with the limit price of the buyer and the seller is usually traded quickly.


The creators or market agents will want to change shares seeking liquidity, so they will review the order with the limit price and update the request. A limit order divides supply and demand so it must be carefully controlled.

Updated: December 9, 2019 — 12:53 pm

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