One of the most common questions beginners ask is:
“Why do stock prices keep going up and down every second?”
How Stock Prices Move? : The answer is simple: Stock prices move because of demand and supply — just like any other marketplace. Let’s understand in detail.
Demand & Supply Concept
- Demand means how many people want to buy a stock.
- Supply means how many people want to sell a stock.
If more buyers want a stock (high demand) → Price goes up.
If more sellers want to exit (high supply) → Price goes down.
Example:
- If everyone wants to buy Reliance shares, the price will rise.
- If many people start selling, the price will fall.
So, stock prices are not fixed — they change every second based on demand & supply.
Market Orders vs Limit Orders
When you buy/sell shares, you place an order. There are two main types:
- Market Order
- You buy/sell immediately at the current market price.
- Example: If Tata Motors is ₹800, and you place a market buy order, you’ll get it at ₹800 (or nearest available price).
- Limit Order
- You set a specific price at which you want to buy/sell.
- Example: You want to buy Tata Motors at ₹780. You place a limit order → Your order will be executed only when the price reaches ₹780.
Market Order = Instant, Limit Order = At your chosen price.
Bid Price & Ask Price
Every stock has two prices visible in the trading screen:
- Bid Price → The highest price a buyer is willing to pay.
- Ask Price → The lowest price a seller is willing to accept.
Example:
- The buyer is ready to pay ₹100 (Bid).
- The seller wants at least ₹102 (Ask).
- The deal happens only if the buyer & seller agree on a common price.
The difference between bid and ask is called the Spread. Smaller spread = High liquidity.
FAQs on Stock Price Movement
1. Who decides stock prices?
No single person decides — prices are decided automatically by demand & supply in the market.
2. Why do prices change every second?
Because thousands of buyers and sellers are placing orders at the same time.
3. Can brokers control prices?
No. Brokers only provide the platform. Prices are controlled by market demand & supply.
In short: Stock prices move because of buyers and sellers.
- More buyers = price rises
- More sellers = price falls
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