HomeОбразованиеRelated VideosMore From: ClayTrader

Trading 101: How is a Stock's Price Determined?

617 ratings | 58871 views
Trading 101: How is a Stock's Price Determined? I received this question from a YouTube follower, and despite it being potentially obvious to someone involved in the stock market for a longer period of time, it's a great and valid question. How exactly is a price of a stock determined? What goes into causing a stock price to fluctuate up and down in price? The good news is, the "how" and "what" is very straight forward. The Ultimate Game: https://claytrader.com/videos/ultimate-game-stock-market/ Free Guide - The 5 Tools I Use To Find Stocks To Trade: https://claytrader.com/lp/Free-Guide-Trading-Tools/?utm_source=social&utm_medium=youtube&utm_campaign=resource%20guide Enjoy this Free Content? I'm confident you'd enjoy my premium training courses then: https://claytrader.com/training/ Hear real life trading journeys from "normal" people: The Stock Trading Reality Podcast - https://claytrader.com/podcast/
Html code for embedding videos on your blog
Text Comments (236)
why cant the company fix price on its own without paying heed to this demand and supply stuff
ClayTrader (3 days ago)
Why would a company want to fix it's price?
does rise in demand increase face value of shares
ClayTrader (3 days ago)
Yes.
does this has anything to do with the earnings per share (eps)
ClayTrader (3 days ago)
Kind of.
jaguar warrior (4 days ago)
That's a load of bullshit because I've seen a stock sell 3x more than the average volume and still drop heavy in price. While stocks that dont even meet their average volume rise. Dont waste your time watching this bafoon
ClayTrader (4 days ago)
Thanks for the thoughts.
Jack Lee (18 days ago)
a stock lesson for kindergarden babies
ClayTrader (17 days ago)
Thanks for the compliment. I was looking to make it as simple as possible. Please remember, the entire world is not as smart as you apparently are. Cheers!
Saving Zelda (1 month ago)
Thank you Captain Obvious, the video helped a lot! The question then is, what if there are a million shares and they are owned by one person, do they decide the value? I mean, does the stock price increase with every purchase of stock? what if I were to buy 50,000 dollars worth of .02 penny stocks, would there then be a large difference on share price even though it was just 1 person purchasing?
ClayTrader (1 month ago)
You're welcome.
Saving Zelda (1 month ago)
+ClayTrader thank you!
ClayTrader (1 month ago)
This playlist will help https://claytrader.com/blogs/trading-101/
Curtis (1 month ago)
Crap
ClayTrader (1 month ago)
What?
Dinz (1 month ago)
I got this, now the question is: Assuming that there is ZERO demand on a stock, the price will drop down to its MINIMUM of all time, now that minimum price, how is it determined? At this case i believe that in this case we will start dealing with things about the company itself and other laws...
ClayTrader (1 month ago)
Watch this https://claytrader.com/videos/how-a-stock-can-lose-you-money/
Luke Skywalker (1 month ago)
Come on! Quantitively, how is the exact price determined?
Luke Skywalker (1 month ago)
+ClayTrader I just didn't find the answer I was looking for after spending 5 mins on your video. No yelling intended. Lol
ClayTrader (1 month ago)
Why would I help someone who starts off by yelling at me? lol
Rob Morrison (1 month ago)
ThankZ
ClayTrader (1 month ago)
You're welcome.
Stanley Havok (2 months ago)
thanks Clay. this helps
ClayTrader (2 months ago)
You're welcome.
Michal Kravec (2 months ago)
You just insulted my intelligence and wasted time.
ClayTrader (2 months ago)
Bummer.
david lange (2 months ago)
Any help on, how to price your stock so that one can raise capital to expand my business? I own all 100,000 shares and would like to purchase a $500k building, plus another 100k for tenant improvements.  I've been a sole proprotor for 35+ years but incorporated this year.  So trying to understand.  Expansion to assist in cutting COGS, as NET is low.  Gross at 850K this year.   Also, can you buy your stock back, or are others always going to be a part of the business?  It's been a family business from the start.
david lange (2 months ago)
😄
ClayTrader (2 months ago)
That's more advanced stuff. I don't have any videos on that topic (for now at least).
James Paquin (3 months ago)
Probably the least informative video I have ever seen. So terrible. So how is a company like Google's price determined vs Amazon's? That would have actually been helpful to someone
ClayTrader (3 months ago)
Thanks for the thoughts James. I'll try better next time.
Money guy (3 months ago)
Great Video, Thanks 😃
ClayTrader (3 months ago)
You're welcome.
Georgios Moukas (3 months ago)
Hey Clay, Hope you are doing well. I am kind of new in the investing world and I am trying to figure some stuff out. Great Job on your video, the concept seems about right but how is the initial price of a stock determined? I think that the initial price of a stock is determined by the book value of the company and then the price fluctuates depending on the supply and demand (exactly what you're saying). Does this sound right? Let me know, Thanks!
ClayTrader (3 months ago)
It's determined by what I discuss in this video. The more people that want it, the higher the price will "start".
Dear Clay, beside supply and demand, also Short sellers, Naked Short Sellers..Day Traders, Warren Buffets and Banks.
ClayTrader (3 months ago)
All those things you listed is "what makes up" supply and demand.
Redneck Rap Star (3 months ago)
so in other words you don't know.
ClayTrader (3 months ago)
+Redneck Rap Star "who" as in their name, date of birth, living location, etc.... well that's correct. "Who" as in more a general sense, I go over that here https://claytrader.com/videos/ultimate-game-stock-market/
Redneck Rap Star (3 months ago)
ClayTrader yes, but the question was more specifically: who pushes the button that actually changes the prices in real time. for example: you have a product at WM that goes on clearance. we already know all the possible reasons the product is beibg put on clearance but, someone in corporate actually makes the decision to put it on clearance, someone in the store marks it down and puts it into the computer as a clearance item and someone on the floor actually stacks it on the clearance rack with a yellow tag that says "Clearance" on it. so, in this case, the question was not "why" do stocks go down -- a fifth grader knows about supply and demand. The question was WHO actually marks down the price with their little clearance sign. and the answer is that you don't know.
ClayTrader (3 months ago)
As stated in the video: supply vs. demand.
Juan Tapia (4 months ago)
So answer me this stock guru. When Apple's stock reached 1 trillion in "Market value" they give Tim Crook a pretty huge bonus but in stock money which he cashed out right away. Where does money come from? How come Apple didn't pay out of their own pocket? Now the stock is down to about 850 billion. So does he give that money back because now it's not a "trillion dollar company anymore. Because the company is out 150 billion plus the what they payed Cook. How much does Apple really own of it's own stock? It almost feels like this money magically appears from thin air.
ClayTrader (4 months ago)
You are way overthinking this.
Juan Tapia (4 months ago)
+ClayTrader Doesnt make sense. Thanks for trying. Almost sounds like the company pockets your lose.
ClayTrader (4 months ago)
The person you went up against - https://claytrader.com/videos/ultimate-game-stock-market/
Juan Tapia (4 months ago)
+ClayTrader So when a share is at 250 I buy say 10 shares. So I paid 2500 and then they drop to 100 a share. Now I only have a 1000. Where does the 1500 go? Who pockets the money? It has to go somewhere.
ClayTrader (4 months ago)
"money appears from thin air", yes, that's what "value" is.... look in the world of art... people "value" a painting all of a sudden higher, therefore it is "worth more" and money appears.... same thing with stocks... it's what people find a stock to be "worth"
Zhang Guoyu (4 months ago)
this is not the question they asking.
ClayTrader (3 months ago)
+Callum Cook This should help https://claytrader.com/videos/ultimate-game-stock-market/
Callum Cook (3 months ago)
ClayTrader yes who excactly determines the price if a stock goes from £1 to £2 who decides that change, 1. if someone is going to buy a stock they aren’t wanting to pay £2 for something that is worth £1 so it can’t be this 2. Or Is it the company deciding basically saying “we’ve got the hot new product we can charge as much as possible” 3. Or Does a computer decide based on trends
ClayTrader (4 months ago)
You sure?
vivien danskin (4 months ago)
I Enjoy your easy to understand explanations. Helps me a lot with your videos
ClayTrader (4 months ago)
Thanks for the feedback. Glad you enjoy!
Klara Kathleen (5 months ago)
i love your hair bro
ClayTrader (5 months ago)
Thanks.
Nirmal N (5 months ago)
There is a buyer for a seller or there is a seller for a buyer, then how does the price change
ClayTrader (5 months ago)
Supply vs Demand
Velvetcool (5 months ago)
Yawn! That does not explain how the price is set. Why is one stock 25p and another £7.50. What stops me forming a company and floating it and setting 1,000,000 shares at £5 each?
ClayTrader (4 months ago)
+Velvetcool lol...
Velvetcool (4 months ago)
Well, because you took so long to state the obvious. You can see from the comments what we wanted to know. No offence meant though.
ClayTrader (5 months ago)
So you mock the video with "yawn!" and then proceed to ask me a question? lol
Happy traveller (6 months ago)
Your video's are brilliant. Please can you do a video on how to set up an account for buying stocks. Can you do a video for beginners where you show how to buy and sell stocks. Thank you
ClayTrader (6 months ago)
This playlist will help https://claytrader.com/blogs/trading-101/
tockmgal (6 months ago)
The sounds your marker makes when you write with it is so annoying to listen to.
ClayTrader (6 months ago)
Sorry.
Emil Valentin (6 months ago)
Perfectly explained love IT ¡ keep up the good work
ClayTrader (6 months ago)
Glad it could help!
Adam Dalton (7 months ago)
can I get back these five minutes of my life
ClayTrader (6 months ago)
Nope.
junkdna83 (7 months ago)
your video should have either been less than a minute, or spent the 6 minutes going into more detail instead of ranting & repeating yourself over and over
ClayTrader (7 months ago)
Sorry you feel that way.
Shaheer Ansari (7 months ago)
I see that the value of shares keeps rising and dropping every few seconds. Does that mean that there is increase and decrease in the number of people who want to buy that particular share and who want to sell it? Is that what causes the values of a share/stock to keep changing constantly?
ClayTrader (7 months ago)
This playlist will help https://claytrader.com/blogs/trading-101/
Drake Coldman (7 months ago)
Please make videos from business to investor perspective
ClayTrader (7 months ago)
I'll see what I can do.
Drake Coldman (7 months ago)
ClayTrader Not How Invest Into Company, but ask what you should offer to investors.. How you should give equity ownership at which price.. Both at start up and developed company
ClayTrader (7 months ago)
Could you be a bit more specific?
ohmy love (8 months ago)
This was my first question in my head when I watched your very first video.
ClayTrader (8 months ago)
Hope this video helped!
DiscreetNinja TV (9 months ago)
The irony is Tobacco companies share prices increases year on year eventhough many studies or awareness campaigns held on the danger of smoking. Everyone is like, I want the British Tobacco shares, put me in 10lots. What weird world we live in
DiscreetNinja TV (9 months ago)
ClayTrader absolutely
ClayTrader (9 months ago)
The power of addiction.
Deepak Chapagain (9 months ago)
Useless
ClayTrader (9 months ago)
Sorry to hear that.
Sylvian (9 months ago)
Price is NOT value
ClayTrader (9 months ago)
You are splitting hairs. The "value/worth" of anything is the "price" someone is actually willing to pay for it.
Slash1550 (10 months ago)
According to the pepperoni example, I should have died centuries ago.
ClayTrader (10 months ago)
Good!
Slash1550 (10 months ago)
ClayTrader no, it’s beating. I’m no clock.
ClayTrader (10 months ago)
And your heart is still tickin'?
Nicholas Glatter (10 months ago)
Thanks for your video and time. My question to you: I'm currently invested in an energy sector stock that is doing really really well, it has great fundamentals, and increasing institutional investors. Now, my understanding is that high volume accumulation on a stock causes the price to increase (demand) but, I'm noticing that this stock is surging up in price on below average volume days.... how is this possible? Why is the price going up when no one is buying it on that day?
ClayTrader (10 months ago)
Because apparently not many are selling.
mike menard (11 months ago)
So on an active trader - if the price of AGEN is at $4.38 and there are 23 sell orders at $4.39 and 4 buy orders at $4.37, and I put an order of 20 buy orders at $4.40. What should happen, in theory?
ClayTrader (11 months ago)
Then you get 20 shares.
pankaj sharma (11 months ago)
What is the role of management of a company than. how's the profit of a company get distributed among shareholders. The money which company borrowed from market when they going to return it
ClayTrader (11 months ago)
This playlist should help you out quite a bit https://claytrader.com/blogs/trading-101/
Kelly Thomas (1 year ago)
So basically stocks are basically Pokemon cards. Everyone trades them, but they have no other purpose otherwise (since no one ACTUALLY plays games with them and stocks don't do anything). Almost like a pyramid scheme. Everyone buys the skincare products, only to one day sell it to another person for hopefully a higher price. And no on ACTUALLY uses the product.
ClayTrader (1 year ago)
That would be incorrect. Stocks serve many purposes.
EriQ Ali (1 year ago)
Soooo basically you don’t know either. Thanks!
EriQ Ali (1 year ago)
ClayTrader, you may have described the cause of a stock price going up and down, but what you didn't do is explain how the price is actually determined. For example. Apple stock is currently trading at $178 per share. Who or what set that exact number? Algorithms, simple math, a broker, etc. If I own a product (say homemade apple pies), I myself set the price based on the cost of the materials I use to make them and the time (labor), plus quality. And if the demand for my pies increase so much, that I can (and may have to) increase the price due to the fact that the pies take time to make. I am now setting the price based on what I think someone is willing to pay. But it's ALL me myself and I setting the price. Who/what sets the price of a stock?
ClayTrader (1 year ago)
I do know. I just explained it. Supply vs. Demand.
mr k (1 year ago)
what about the value of the company? Does this means the companies like apple and google, their market value are not the real value for them. beside they are more like bitcoin which all of its value was given by people( investor)?
ClayTrader (1 year ago)
The value of the company is calculated via their "market cap".
Flavien Hirwa (1 year ago)
Ok, I get the supply and demand thing. But does the value not have a relation with the profits of a company? Because if I may believe some advise I got is quote 'you should buy a stock only if it is below its intrinsic value'. thanks for your reply personal email: [email protected]
ClayTrader (1 year ago)
It's all supply and demand. Rationale would say that the more profits a company has, the more people "want it", so therefore prices would go up, but that's not always the case. This is what makes the markets so challenging.
L0wborn (1 year ago)
What other factors are there? Because ive seen a stock have no news and regular volume sky rocket. Then ive seen good news and added volume do nothing. I'm watching one right now that has heavy volume and its going down with no news...
ClayTrader (1 year ago)
I guess not. Sorry.
L0wborn (1 year ago)
ClayTrader I don't think you understand my question
ClayTrader (1 year ago)
It's all based on Supply vs. Demand.
rupak pandey (1 year ago)
one more question -can price of initial issued share decrease...when company is in loss or at any point of time?
ClayTrader (1 year ago)
Of course.
rupak pandey (1 year ago)
thank you sir.. you solved my problem...
ClayTrader (1 year ago)
Great!
Moroccan Hiker (1 year ago)
This video just states the obvious. But for those of you who are actually curios on the exact mechanics, the open price is calculated by the stock exchange like the NYSE for example. Every morning they set the opening price by taking pre opening orders and offers. the stock price is the highest amount someone is willing to pay for the stock, or the lowest amount that it can be bought for. The calculation of prices is completely automated, software driven, and anonymous at the specific exchange, and the price is calculated by electronically matching bids and offers for a particular share recorded an electronic limit order book (ELOB). When you place an order to buy a share at a certain price that is called your “bid” and when you place an order to sell your shares at a certain price that’s called your “ask”. The ELOB contains all the bid – asks for a particular share and the system matches the best bids and asks to execute an order. The price at which a transaction is executed is called the last traded price (LTP) and that’s what you see on TV screens.
Robin Napoleon (6 months ago)
الكئيب Your answer needs to be framed on my wall. Thank you. This is exactly the answer I was looking for. The video, of course, uses the terms "supply" and "demand" and your terms "bid" and "ask" are essentially correspondent to it. The Stock exchange is basically an auction clearing house for company shares. Lots of people are "bidding" for shares and the stock exchanges already have the information for those pre-orders or bids on their databases and they simply update these figures and these are what we see on all those TV screens. Now of course there are other factors at play like people's perception of the company but now relate this to my analogy of the auction (one or two people start walking out the auction room because they feel the company shares aren't worth it and this influences everyone else who are reluctant to bid the company shares even if those shares go down). When the people in the auction room have a high demand (or when the supply goes down), the prices go up because you want to sell something for the highest price. When their demand goes down (or when supply goes up), the price goes down.
Bastiproton (9 months ago)
ClayTrader your entire video was "price (of stock in this case) is determined by supply and demand" that's it. That is definitely stating the obvious.
Suraj Naik (11 months ago)
These videos from Udacity wont explain the price decision factor but there is something called as order book which every stock exchange manages.. More on it here...https://www.youtube.com/watch?v=_0KVAfy49h0 watch related videos
Rahul ki PaathShaala (11 months ago)
إقتصاد نت You nailed it . Thanks
moviedude22 (1 year ago)
But where does the actually initial share price come in whether or not the company has the luxury of being listed on a Public stock exchange or is private. Is all stock valued at a nominal Par value?
Alen Batagelj (1 year ago)
long video without the answer, The question is how is price determined an not what influence the price
Flint (21 days ago)
The stock exchange calculates the price every morning based on what people are asking on their orders and they set an opening price. Then you see the last traded price.
I Love Pizza (8 months ago)
Supply and Demand. That is exactly what makes it move! Since the 1800's! What makes the demand for the stock is variable and the demand to sell it is also variable. But the simple answer is Supply and Demand. Ask any professional trader.
Suraj Naik (11 months ago)
These videos from Udacity wont explain the price decision factor but there is something called as order book which every stock exchange manages.. More on it here...https://www.youtube.com/watch?v=_0KVAfy49h0 watch related videos
ClayTrader (1 year ago)
Prices are determined by the influence I just talked about.
Right. Where does the exact price of a stock come from though? Its all a computer calculation now correct? So when a stock moves from 5.51 per share, to 5.73 per share, what specifically determines this move and how are those exact numbers calculated?
Ultimate Warrior (2 months ago)
+ClayTrader shut up fool. Your videos suck
Rakesh Talasila (3 months ago)
+ClayTrader Hey thank you for quick reply.
ClayTrader (3 months ago)
+Rakesh Talasila this has the math in it https://claytrader.com/videos/college-degree-needed-trading/
Rakesh Talasila (3 months ago)
+ClayTrader please give the math behind a stock price decreasing from A to B.
Jon Rulz (5 months ago)
​+Robin Napoleon People are negotiating between one another between buy orders and sell orders. There is no algorithm that makes the market price, it's the people that are bidding or selling. No one magically makes up a number from NASDAQ and says this is the price now. It's exactly as olden times, where people would go in a room and start bidding, except now with computers we can expand this bidding war to everyone around the world. At an auction house, the highest bidder wins, and the sellers HAVE to sell. In the case of a market, you do not have to sell. You have multiple bidders and multiple sellers. If you wanted to sell your share at 100 and the market value is currently 50, you do not have to sell right now, you can wait til it goes up (if it even does). Now, you are wondering WHY is it 50, it's because there are people willing to buy and sell it at 50 dollars. It meets the middle ground of buyers and sellers, and when you have millions of people trading, this middle ground changes constantly on the day. If 1 person bought at 50$, that doesn't mean everyone has too. Prices change as time progresses because of news. It goes back to supply and demand. Now, you talk about private negotiations. This would never happen in bigger companies for reasons that, If someone wanted to buy a share for 1$, but the market is currently 2$, who on earth would privately sell for 1$ when they can get 2$ for it. This basic understanding leads to how the market price is found. Market Price is the CURRENT selling/buying price because that's what BOTH sides are willing to buy/sell at this moment. It's a war between sellers and buyers. Also, you say 1$ is a low and 100$ is higher like it matters what someone uses as an example. Mathematically, 100 is higher but in the market prices it doesn't matter, only the percent changes matter. If I wanted to use 1$ as an example, it can be the same as using a 100$ example. Either will work. If I said I put a 1,000$ into a share that costed me 1$ and it increased to 2$. I now have 2,000$ or a 100% gain. The same can be explained if I put $1,000 dollars in a 100$ market, and it increased to 200$ which is a 100% gain. Exact same as the last example, I will have a $2,000 account. Just because a stock A is worth 1$ and stock B is worth 100$ doesn't mean that stock B is more valuable than stock A. It comes down to the number of shares they have. Stock B could have 1 share total, and Stock A could have 1 million shares total. If you do the math, Stock B is worth 100$ and stock A is worth a million even the the price per share is lower.
Mohsin Razzaq (1 year ago)
Hi im mohsin.can yu plz guide me hw can we determine actual price of stock cze its happened with some companies in pakistan that they increase their stock value and in actually their cimpany demand is not much.so guide me in this matter
ClayTrader (1 year ago)
I can guide you here https://claytrader.com/courses/
Ben Howe (1 year ago)
Thank you fot this video. Easy to understand and very informative!
ClayTrader (1 year ago)
I appreciate the feedback. Glad it could help.
cruzininblueshoes (1 year ago)
well i had the same question but your answer did nothing to address it. What newbies want to know is literally WHO sets the price and HOW? No one is so stupid that they need to have supply and demand explained to them OMG. What I would like to know is who is the guy inputing into the computers in lets say the TSE the actual stock price or spot price of gold and how does he arrive at that price in practical technical terms. What numbers is he crunching, what actual data is he using to set the price and who is he that he is allowed to set the price?
cvandenberg15 (2 months ago)
+Robin Napoleon Thats what the elite do
I Love Pizza (6 months ago)
Exactly. After their IPO it really is just supply and demand. Is it over valued or under valued. Sometimes its under valued and still sinks and sometimes its over valued and still goes up. There is no simple answer to what makes it move. But it isn't just a guy behind the computer changing the price to every stock every minute of every day. like some think thats what happens.
Nate Stombaugh (6 months ago)
Dew Time it's not just a simple answer man. Clay did a good job generally explaining why stocks move up and down. People that supply and demand the stock decide what the price will be but, that is not what makes up the price. The company behind the stock and what they do makes up for the price of the stock and it's up to investors to determine whether it's a good deal or not.
I Love Pizza (6 months ago)
That's a lot to take in. There are lots of reasons why stocks don't go up to infinite. News can be the leading factor in what causes the masses to sell off before they lose money (or more money on a stock). So fear will cause somebody to sell even if it isn't for a profit. A company can show loses on their quarterly report making the stock seem less valuable and that can cause a sell off and lower the price on stocks. There are so many reasons why stocks go up and down. There isn't a magic guy just setting the prices to all 14000 US Stocks. But it is still supply and demand at the root of it. If stocks were so simple and easy to understand everybody would be rich. Me included. It is so complex and I don't understand a lot of it, but I do understand that there isn't a guy setting the prices. Because you watch the Bid/Ask price all day long on stocks and the volume changes and the price changes minute by minute.
Robin Napoleon (6 months ago)
Shaun Sollie A stock is an asset like any other. Buying stock is the same as buying cars, houses and gold bars. The difference is that stock is an intangible asset, which means it doesn't have all the storage problems of cars and gold bars. But, like all assets, a stock's value can either go up or down. Stock trading essentially follows the "buy low, sell high" pattern. You say that the the market has always run based on supply and demand, where there will always be a demand to sell if the price is right, and there is almost always a demand to buy if the price is right. The question then becomes what exactly is the right price? It's easy for a prospective buyer to say that he wants to buy a certain stock for a certain price but it's a whole other story when the seller refuses the buyer's offer because it's too low. Naturally people will always want to sell something for the highest possible price and people are generally reluctant to buy something knowing that, in buying it, they are making a profit for the seller who previously bought the stock for a low price and is now selling it for a higher price and thus making a profit. Now repeat this a few times and the price of the stock should be going all the way up to infinity. Because someone will buy low and sell high, and the next will sell that for even higher and someone will buy it for higher, and in turn will sell it for much higher than what he previously paid for it, and so on to infinity. So why aren't stock prices much lower than what they should be? I'd be expecting stock prices only to in one direction and that's upwards because every person is trying to sell his stock for a higher price than the previous. Let me illustrate this with an example: you buy a stock today for $100. Tomorrow it goes up to $200. You sell it and reap a profit of $100. Tomorrow that stock you sold goes up to $300. Now the person you sold to (who knows how much the stock was worth when you originally bought it) sells it and reaps a profit of $200 ($300 - $100 = $200). Repeat these steps millions of times and see where this is going. Now, you reach a point where the next person will not buy your stock for anything higher than what you originally paid for it. And, as a result, you lower your price to the point where the person will agree to the right price. So now the stock goes down and you go back to square one and sell the stock for $100. Now the new owner of that stock must rely on market trends to see whether the stock will go up to $200 or $300 tomorrow. And this is a cyclical trend (stocks go up, peak, go down). Profits are continuously being made from the buying and selling of stock, and the companies under which these outstanding shares were issues can either pay dividends or use the money to re-invest in itself to expand its business and grow and become bigger companies and eventually be able to pay even bigger dividends (or choose to re-invest those). This is the strategy that Berkshire Hathaway uses. Their share price is about $192,000 but they don't pay dividends since they prefer using that money to re-invest in themselves and expand their business and eventually their share price will double or triple over the years and then you can decide whether to sell these shares or not. It's like buying $1,000 shares of Apple during its initial years. It might not have been worth much then but today it would be worth a lot.
Suresh S L (1 year ago)
Might be not a logical question. If some company not performing well, and nobody discussing about that in media. What will it happen to the company stock price. Will it decrease or not.
ClayTrader (1 year ago)
You didn't watch? lol... come on man. I don't think it's too much to ask you watch a video before commenting on it. Ya know?
Suresh S L (1 year ago)
ClayTrader I didn't watch. Let me watch that first. Thanks
ClayTrader (1 year ago)
Did you watch the video you are responding on? Supply vs. Demand. Please rewatch it.
Suresh S L (1 year ago)
Couldn't understand could you please elaborate bit more . When company not performing well, how does it directly affects the stock price. As per my understanding the stock price is decided between the buyer and seller and not by the company.
ClayTrader (1 year ago)
If they are not performing well, then the stock will go down.
VIJAY KUMAR (1 year ago)
Hi Clay, I am getting training for certified investment banking course. can you please suggest me and can you send me the links of your classes to get good knowledge and clear understanding of the lessons. i have gone through your classes on youtube you explained very clearly can you please send me the links which required for certified investment banking course.
ClayTrader (1 year ago)
My courses can be found here - https://claytrader.com/courses/
John C (1 year ago)
How does a company's profit affect the stock price? I don't understand. If there is a company increasing their profit very quickly couldn't the stock price actually go down if everyone wants to sell for some reason?
ClayTrader (1 year ago)
That is possible for sure. Not likely, but possible.
Hargovind Singh (1 year ago)
A very nice teacher.. You explain things well clay..
ClayTrader (1 year ago)
Thank you.
Hargovind Singh (1 year ago)
You are doing amazing work clay
ClayTrader (1 year ago)
Thanks. Glad you enjoy.
aljawisa (1 year ago)
So who inputs the value of the price of stock into the computers, or is it all automated by an evil hal 9000? What man behind the curtain gives the order to change the value of the stock of an company, and have it input into a computer; the company itself or some mysterious troll who lives inside of the new york stock exhange eifice itself?
Mboneni Radebe (5 months ago)
+Robin Napoleon Good explanation Robin!
Robin Napoleon (6 months ago)
Dew Time On eBay you have iPhones selling for various prices and you naturally want to sell it for the highest possible price. So, let's say you got a brand new iPhone sealed in the box and want to sell it for, say, $1,300. No one wants to buy it. Now you reduce the price to $1,100. No one wants to buy it. Now you reduce it to $1,000 and someone sends you a message with an offer saying that he is willing to bid for $950 and thereafter you get another message from someone who will buy it for $900 so you negotiate with the latter and eventually accept this offer and sell your iPhone. So in this example, there's a demand (someone wants an iPhone and there's a supply of an iPhone). You reach a point of equilibrium where you come to agree with your prospective sellers on what price to sell for. In the iPhone example, the "opening" iPhone "stock price" was $1,300 and at the close of the day it went down to $900. Let's suppose that you refused to sell for this price and waited for the next day. Your opening offer would then be $900 (last bid was for). Stock exchanges essentially have all the pre-order/bid information in their databases (what buyers are willing to buy stock for as set on their stop limit orders with their brokers). Remember, when you want to buy a stock, you have an account where you can set various perimeters like "buy X stock when X stock goes down to $X" or "sell X stock when X stock rises to $X". The stock exchanges already have this information and it gets updated automatically on the TV screens and these are the figures you see every day and they fluctuate because different people are bidding against each other on what price they will accept/offer against each other. The stock exchange is one big auction house where people are constantly outbidding each other and, instead of an expensive painting or Patek Philippe watch, the product they are trying to buy are company shares. The difference is that, unlike an auction, in a stock exchange there is no one standing with a hammer to control offers because, rather, the buyers and sellers have those hammers because they each have their own invisible hammers. So one person is saying (or setting on his broker account that he has opened with a brokerage firm) that he wants to buy a stock for a certain price, and another person is saying he wants to sell that stock for a certain price.
Dew Time (1 year ago)
Clay you never answer the question. What you’re saying would make perfect sense if we’re talking about eBay. But why is it that google stock closed at a set price vs on eBay you have multiple different prices for an iPhone X for example.
Hargovind Singh (1 year ago)
No its all about demand and supply
ClayTrader (1 year ago)
Buyers and sellers determine the price.
Rickie Carman (1 year ago)
keep do'n ya thang bro. i learned a lot. i really appreciate all your videos. u the man!!!!!!
ClayTrader (1 year ago)
Thanks for feedback. Glad you're enjoying.
jash8585 (1 year ago)
probably stupid question or someone already ask this the price when it first goes on the stock market who determines the starting price
ClayTrader (1 year ago)
Same principle.
ayush joshi (1 year ago)
But sir, Who decide the value?? Like how it goes up from $5 to $6 and why not $7
RYG Trailers (1 year ago)
Yes you've explained how, but his question is same as mine. Who? is there a Department in a company that focuses on numbers of stocks traded? the CFO? the Board Members of each company or the people working in Security exchanges? The question might be stupid but i dont know, im new to this. Thank you
ClayTrader (1 year ago)
I explain that here - https://claytrader.com/videos/stocks-price-determined/
Change0faNickel (1 year ago)
Hi Clay. Quick question regarding this topic. When you decide to buy or sell a stock, who do you buy it from or sell it to? Are all stock transactions made just to the company that is offering the stock? It might be a dumb question, but I thought I would ask anyways. Thanks a ton for the videos, I love the content and keep up the good work.
ClayTrader (1 year ago)
This should help you out - https://claytrader.com/blogs/trading-101/
muhammad qasim (2 years ago)
sir, which kind of companies are best for swing trading...i mean which kind of companies has more fluctuating shaeres price..??
ClayTrader (2 years ago)
That's what I show here, among many other things - https://claytrader.com/training/
Ransom Locke (2 years ago)
u said in another video that the price growth goes up when the company is successful?which is correct?
ClayTrader (2 years ago)
Would you want to buy shares in a company that is successful or that you think will be successful?
Ransom Locke (2 years ago)
if pepperoni is good for u y would you by the shares?if the company makes more money that has nothing to do with share price,the price goes up cause people are buying shares not pizza.
ClayTrader (2 years ago)
If people "want" shares, regardless of company performance, then prices go up.
Vortek G (2 years ago)
I understand the concept of the video. With that news of pepperoni being good a lot of people will buy the company's share thinking the company will be profitable in the future. So, it's like buying through your fundamental analysis of the company. But share price can still go up because of increased volume of people buying the stocks regardless of the company's performance. Is that right?
ClayTrader (2 years ago)
And what makes people want to buy the shares?
Vic Wolf (2 years ago)
Clay, you've made amazing gains in the market and now I see you've made amazing gains in the gym. Keep it up!
ClayTrader (2 years ago)
Thanks man, trying my best!
Sam Ali (2 years ago)
Hey Clay, I love your vidoes been watching 2 or 3 per day, Learning a lot from you. do you have any information on what it means when the stock market opens and closes and why is there determined time?. Does that mean that is the only time you can trade at those specific hours when the market open and closes? What is after hours in the stock Market? Thanks
ClayTrader (2 years ago)
Stock markets (depending on country) are open for a set of hours, just like a store.
J.Manuel Rios (2 years ago)
Thanks, Good breakdown of the info. I'm interested in learning to trade. Suggestion: Can you enlarge your icon picture ? The current one gets lost amongst the rest of the channels
ClayTrader (2 years ago)
Thanks for the suggestion! As far as learning, I do offer video training courses here - https://claytrader.com/training/
muhammad qasim (2 years ago)
sir tell me some thing about swing trading ...and tips for it....
ClayTrader (2 years ago)
Learn how to read charts, here's why - https://claytrader.com/videos/want-flexibility-learn-how-to-trade-with-charts/
Ashes m (2 years ago)
another reason are market makers..... market makers are the real reason on how a stock price is determined. An individual investor or company who has the most money to regulate said stock price through shares of a particular stock, which can also be correlated with support and resistance. of course once heavy volume comes in and the demand is great, the price will shoot through the resistance and up the price even more, which is what your video is explaining...... yeah, its hard for me to simplify what im thinking in my head. you make explaining things a lot easier than i can, thats why your the one making the videos lol
Michael Dewey (2 years ago)
ClayTrader that's really what I wanted to say I just tried to be a little more subtle. It is truly becoming a thing of the past... Their purpose is not to provide support and resistance. The true "market makers" were specialists who actually did supply liquidity. The trade off for them providing liquidity in bad times was that they always saw the order book and knew who was trading what.
ClayTrader (2 years ago)
The market maker thing on penny stocks is a sham. It's a dumb excuse that pumpers use to cast the blame on others to hide the fact that THEY are the ones dumping their shares. I have an entire course on this stuff - https://claytrader.com/courses/the-penny-stock-survival-guide/
Michael Dewey (2 years ago)
John Manuel not so much for very liquid stocks but in an OTC market, yes. Most trades are done over ECN'S if the stock is exchange traded, and market makers are playing smaller roles. You see more MM's in the OTC/options markets. I think a lot of the information online is outdated on this topic, so I hope this provides some insight.
ankur Malhotra (2 years ago)
Hey Clay ,while determining the value of the stock as in to buy or to sell do we have to look at the intrinsic value of the stock and the opportunity cost of holding the stock or the notional value of the stock ie the inflation bearing value of the stock. Logically it may present a trigger situation wherein people albeit unsuccessfully try to time the market and loose.Watching your videos doing live trade gives me a sense of directional trading which is clutter free and rational,away from top heavy concept.Thanks for selfless knowledge empowerment absolutely brilliant
ClayTrader (2 years ago)
I just use charts to figure out if I want to buy or sell, but that is just one way to do it.
Anttjuan Reid (2 years ago)
So whether the company is doing good or bad is independent of whether the stock value goes up or down right? Because if the company is doing bad but everyone is still buying shares, on the chart it is going to show that the stock value is moving upwards. And if the company is doing great but everyone is selling shares, the chart will show them going down, correct?
ClayTrader (2 years ago)
Good!
Anttjuan Reid (2 years ago)
+ClayTrader Thank you for the link. That actually answered my question fully.
ClayTrader (2 years ago)
"bad" and "good" are subjective. I mean you could look at something and think its "good", but if people want to "give", and therefore prices go down, then according to the only thing that matters, price action, it is actually "bad". Here's another way to look at it - https://claytrader.com/videos/suck-guessing-heres-solution/
Tirmizi Trend Trading (2 years ago)
Nice content
ClayTrader (2 years ago)
Thank you.
JayMartinG (2 years ago)
wt... somehow you look younger ! great video by the way! haha
ClayTrader (2 years ago)
haha, I'll take looking younger!
Financial Media (2 years ago)
Great video, very good information!
ClayTrader (2 years ago)
Thanks, glad it could help!
SirRock Jones (2 years ago)
Hey Clay, I've been paper trading faithfully for 3 months now and I've been getting a feel/understanding using TA w/ a lil' Fundamentals also mastering the platform I'm using (TOS). What I don't understand is, when I'm in a Long Position and it's not going in my favor and want to get out quick (because price is dropping fast). I would place a Market Order to get out and what I Notice is that sometimes I would market out with Profits and sometimes not. What would determine that market price to be in my favor?
ClayTrader (2 years ago)
Those are the things, and more, discussed and shown here - https://claytrader.com/training/
muhammad qasim (2 years ago)
sir kindly tell what procedure should we follow to select a company to buy its shares?????????????????????????
ClayTrader (2 years ago)
You're welcome.
muhammad qasim (2 years ago)
thanks for real quick reply...
ClayTrader (2 years ago)
Those are the things, and more, discussed and shown here - https://claytrader.com/training/
chanman0916 (2 years ago)
great video, very well explained! thanks alot!
ClayTrader (2 years ago)
Thanks!

Would you like to comment?

Join YouTube for a free account, or sign in if you are already a member.