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Poppin-z

how stocks work...

i know how stocks gain value etc (i have some stocks myself)but when you buy a share, who are you buying it from and when you sell a share- who to?when ever i bought a stock (from what i understand, a % of a company) i got it almost immediatly- not waiting for somebody to sell. how is this possible?
Globally Interested:

Shares are traded through the exchanges . Your broker has access to people on the floor of the exchanges. Bid and ask prices are continually being called out. When a bid matches an ask, the deal is made. The ease with which stocks may be bought and sold is referred to as their liquidity. It is the large volume of trades that contribute to this liquidity. For example AT&T traded over 23 million shares yesterday. In the case of shares traded on the NASDAQ exchange, the matches are made by computers.


If you put in an order to buy at the market price, you will get the shares at the lowest current asking price. Most market orders are executed in a minute or less. If you put in a limit order with a maximum bid price, you may have to wait or you may not get it at all.

Poppin-z:

thanks- but what if..
1000 people want to buy a stock
5000 people want to sell

how would that work?

Globally Interested:

If there are no buyers than they are stuck with it until there are. It rarely happens with stocks listed on the exchanges, but it is not uncommon with lesser traded over the counter stocks.
Also, the New York and American exchanges have floor specialists whos job it is to keep the flow going. If trading slows down they may buy for their portfolio or sell from it.

Poppin-z:

o, ic
thank you very much

Buwanna:

The answer could be very complicated. I will give you a simpler form of answer... as well as I can.

I assume you were going through a trading company to do your stock trades. The major trading houses purchase blocks of stock and hold them to sell to individual traders. So when you contact them they mark the price up a bit from what they paid and offer it to you. This holds true for online stock brokers, as well.

But remember that you don't need the brokers to buy stock. If somebody you know owns some, you can buy it directly from him for whatever price you want. All the stock brokers do is provide a middle-man between buyers and sellers. They buy chunks of stock in anticipation of selling it for a profit, and you buy it from them.

Globally Interested:

No way!!!!!

Buwanna:

Beg pardon?

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