Explaining the Fluctuation on Stock Price Charts

When you look at stock price charts, you will undoubtedly notice that the prices of most stocks go up and down quite a bit. Many people that are just getting started in the market do not understand why these prices fluctuate so much. Here are a few things to consider about why stock prices fluctuate.

Market Driven

In order to understand why these prices fluctuate so much, you need to understand how the market drives them. Even though it is important to look at the fundamentals of a company, the opinions of traders in the market is what actually makes the prices move. If more people want to buy a stock than sell it, the price of the stock is going to go up. When more people want to sell a stock than buy it, the price is naturally going to go down.

Sentiment

When you get involved in trading, you will see that the opinion of traders in the market has a lot to do with the price that you see in the market. People might feel optimistic about the chances of a company and this is going to lead to the price increasing in the market.

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