Dear readers
Before entering to the question about basic funda of stock market let us discuss about the basis of a market place.
What is a market place?
The place where seller and buyer meet to sell or buy the product. There is basic principle on why do prices go up and why do they go down in a market. The 2 terms which we already know and which we are very familiar are Demand and Supply.
Scenario1 : Demand (High/Standard) - Supply (Low ) then the Price is (High) .
Scenario2: Demand (Low/Standard) - Supply (High) then the Price is (Low).
Same concept is applied in the stock market as well. Company (XYZ) makes it shares public the customer demand is high then the stock price will be high if the quantity or supply of shares is less.
When the customer wants to sell the product in the stock market after he bought the shares from XYZ company if the company is in losses then the demand for the company at that particular time period may be low as compared to the demand when the company is in profits. This principle of demand and supply and the companies success/failure performances decide the market value of the share.
There are different methods available in the market where we can predict the possibility of the share value going up or down. We will in detail discuss these aspects in our next post.
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