Home Forums Ask Sean Selling or buying volume

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  • AvatarRandy Hahn
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    Post count: 2

    All sales in stocks have both buyers and sellers, so how can a stock have a higher volume of sales or buys? If there were 300,000 sold in a day wouldn’t there also be 300,000 buys on the same day?

    philip_from_calphilip_from_cal
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    Post count: 15

    I’m guessing. However, there must be an inventory of shares aside from those that have owners.

    Sean HymanSean Hyman
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    Post count: 1151

    On the order books, there’s almost always an imbalance of buyers to sellers, in anything of life….as it concerns real estate, technology, clothing, stocks, etc. When buyers willing to buy outnumber those willing to sell, the price goes up. When the number of sellers outweighs the buyers, the share price goes down. On any given day, there are different amounts of buyers/sellers than can be matched up. The buyer has to be willing to buy at what the seller is willing to sell at, etc.

    So, what makes them go up is the imbalance in demand vs. supply.

    Trey JOHNSONTrey JOHNSON
    Participant
    Post count: 7

    So to dig a little deeper, most orders either buying or selling are executed almost instantly. Does the trading platform (Ameritrade), buy or sell this imbalance and hold it on their books?

    Sean HymanSean Hyman
    Participant
    Post count: 1151

    There are limit orders on market makers’ books from all over the place at all sorts of levels. That’s over and above market orders.

    Typically, brokers send order flow to market makers that are separate companies. So from that standpoint, your broker doesn’t usually know all of the order flow out there, except from what they can derive from a Level 2 screen at the moment.

    Jerry BeersJerry Beers
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    Post count: 6
    Sean HymanSean Hyman
    Participant
    Post count: 1151

    Yes, that’s very helpful. The one thing I’d point out is bid/ask is different depending on which side of the table you’re sitting on.

    So, from a regular person’s standpoint, the bid is the sell quote and the ask is the buy quote. However, market makers and specialists are on the other side of those trades. So, for you to buy, they have to sell shares to you and for you to sell, they have to be willing to take them from you/buy them from you (as they’re matching them up with other regular people that are on the other side of your opinion and trade).

    Keep in mind, thankfully, the process works whether those reading this post understands any of these mechanics of trading, just like we don’t know how everything in our car works in order to confidently drive our car each day. So, y’all do keep that in mind. Don’t overly think it or overly complicate it. It’s an element that market makers take care of that you don’t have to give a thought to IF you don’t want to. Now, if it’s a particular interest, nothing wrong with that.

    One more thought…there are not an unlimited amount of shares available to buy/sell at every price quote we see on the screen or chart. Also, limit orders that have been sitting ahead of time on the order books, are in line ahead of market orders that just got placed (later) at that same quote. So there are all sorts of things that happen. But 99% of the time, it’s not going to matter on the scale of shares that the average person deals in relative to the amount of daily trading volume of the type of stocks that we tend to deal in (higher volume stocks).

    AvatarRandy Hahn
    Participant
    Post count: 2

    Thanks for the helpful dialog and website. I now have a better understanding of volume with respect to sellers and buyers.

    Sean HymanSean Hyman
    Participant
    Post count: 1151

    You’re welcome.

    Trey JOHNSONTrey JOHNSON
    Participant
    Post count: 7

    Thanks for the information

    Sean HymanSean Hyman
    Participant
    Post count: 1151

    Glad that helped.

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