If in a day everybody wants to sell a specific stocks and nobody wants to buy that specific stocks?
sam e asked:
Then what would happen?
I see everyday people can sell thier stock without waiting for someone to buy it and I can understand it.
Then what would happen?
I see everyday people can sell thier stock without waiting for someone to buy it and I can understand it.
There are always buyers if the price is right.
That’s a good question. If you’re literally asking what would happen if there were absolutely no buyers (only sellers), then I think the stock would plummet. However, unless you’re dealing with a stock that has extremely low volume, there are usually buyers. Don’t forget, even when some traders short the stock, they still have to cover (which means they’re buying it). So there’s always a buyer!
Every stock has a “specialist” or “market maker” whose job is to hold a large position in that stock and ensure that trading is orderly. If it’s just a short term imbalance between buyers and sellers, the market maker’s job is to step in and buy or sell the shares for which there are currently no buyers or sellers (as the case may be). If there’s a serious imbalance, then the market maker will set a price that reflects the market demand or lack thereof. If the price is low enough, there’s always a buyer.
Large companies with millions of shares traded every day always have plenty of buyers or sellers. But for small companies with only a few thousand shares traded, a shortage of buyers or sellers will cause drastic swings in price. That’s partly why small companies are more risky. You might not always find a buyer at a fair price when you want to sell.