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There is a general rule that when a lot of people are buying shares, then the price will increase and when a lot of people are selling shares of the company, the price will drop. But suppose, there are lot of people buying the shares then doesn’t that mean that there are an equal amount of people wanting to sell the shares at the same time and vice versa?? So how does it make a difference?
It is the job of the dealer on the Stock Exchange to make sure that there are an equal number of people buying and selling! They do this by adjusting the share price.
If more people are wanting to buy then sell, then the dealer will increase the share price.The higher the share price then the more people will be prepared to sell.
Similarly, if more people want to sell than buy, then the dealer will reduce the share price until enough people are then wanting to buy.
Think about someone selling flowers in a market. If nobody is buying them then they will reduce the price until people are prepared to buy them. Similarly, if they find that everybody is wanting to buy then they will increase the price 🙂
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