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Why do Share prices go up and down?

 

Shares are bought and sold on a Stock Market, and just like any market, prices can move around quite a lot. Imagine you are shopping for some of your favourite apples at the local Fruit Market. But sadly lots of other people like these apples too. The savvy Fruit Trader knows how delicious they are and realises he will have lots of buyers today, so he sets a high price. The first 5 sell out very quickly so he increases the price for the rest, pushing the price higher.

This is the same for Shares. Through research or ‘gut feeling’ people will decide if they want to buy a particular apple Share. If they feel someone is selling them cheaply then they will buy them, pushing the price higher. If they think the particular Share looks expensive they will choose to buy something else, leaving the Trader to lower the price of his Shares so he can sell them.

It is very difficult to work out what a Share is worth as there are many different things that can impact a price. This is why Shares in large companies change price thousands of times a day. Moving up and down with any news to do with the company or even the wider economy. This means some people will think they look cheap and others will think they look expensive. This is why it is called Stock Trading, instead of trading apples in the Fruit Market, you are trading Shares in the Stock Market with other people.

No individual person or company sets the price of a Share, it is a result of all the buyers and sellers Trading with each other which determines what the price is at any given moment.

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