What Determines a Stock Price?

Do you know what determines a stock price? There are a lot of complex formulas that affect a stock price, but in essence…

Price movement of a stock is caused by supply and demand in the market. If more people want to buy than sell then the price goes up, the inverse is true if more people want to sell a stock than buy, as surplus drives the price down.

Price movement can even be moved by people emotions.

To help you understand what determines a stock price, what affects it and defines it, I decided to create an infographic that breaks it all down.

Click on the image below to see a larger view…

Stock Price

Conclusion

The one thing we do know for sure is that stocks are volatile and prices can change rapidly. Always remember stock price fluctuations are dictated by supply and demand in the market, which reflect investor’s sentiments and evaluation of the present and future value of a stock.

There are many theories that try to explain the way stock prices move the way they do but no single theory explains everything.

Posted in Infographics

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  • http://www.hookang.com/ Hoo Kang

    Excellent Infographic Tim!

    We need a followup infographic on your strategy on Penny Stocks :)

  • fastow2012

    Hi Tim, is there another way of learning with you without going thru the gazillion videos you made available? I’m asking bcz I’d like to get started with you but the internet connection in my country isn’t fast and stable enough to warrant going thru your videos…

  • http://www.affordablerealestateinvestments.com/ Affordable Real Estate Investm

    My question: Why doesn’t anyone look at cashflow? Yes, I am a real estate investor and thats my main criteria, but information on that and showing how positive they are each quarter I would think is more valuable. Someone with a 20% profit margin is better than someone with a better earning ratio but only 5% cashflow. However, figuring out how to read that aspect is not so easy.