Understanding why do stock prices go up and down is very easy once you look at how things are sold in a busy Lagos market.
In simple words: Prices change because of demand and supply, which simply means how many people want to buy something compared to how many people want to sell it. If everybody wants the same item, the price goes up. If nobody wants it, the price comes down.
For example: Imagine you are selling fried plantain at a school. If twenty hungry students rush to your stall and you only have two plates left, you can raise the price because the demand is high. But if you have twenty plates left and nobody is buying, you will lower the price to clear your food. The Nigerian Exchange works the exact same way.
Remember:
- More buyers than sellers make stock prices go up.
- More sellers than buyers make stock prices go down.
- News and events change what people want to buy.
Try it on StocktoWealth: Open your app today and watch how the price of JAIZBANK moves up and down as virtual buyers and sellers make their trades.
This is for learning, not financial advice.