I'm a fan of volume profiles. In the day, prices move around throughout a range. In a week, prices move around throughout a range. In a month, prices move around throughout a range. Here's the thing: the prices are moving toward a price that they eventually want to hit this month, to see what supply and demand are like over there. So how much should we care about what the price is at one snapshot in the space of a millisecond in a day? I want to get ahead of where market makers are trying to move prices this month. Are you trying to scalp?
I'm not trying to scalp. I am trying to understand how a stock price is determined. So if I buy 1 share and that is all that happens, then how is the price calculated?
I like your question. Stock price is determined by the agreement between the buyer and seller. Market cap is determined by the last price (or EOD or some point in time) times the number if issued shares. The market determines the price, not the company or the brokerage. There is a saying, "the market is always right". This saying is based on the idea the market controls everything and is always right, by definition. Value investors believe the market is not always right. We look for situations where the market is wrong. If the market values a company at X and I think the company is worth 2X, I will buy it and wait for the market to figure it out. In other cases, such as Tesla, I value a company at X while the market values the company at 3X so I pass on the company. Your question shows that you can see a link between market price and corporate worth. 99% of people who trade stock see the market as a random number generator against which to gamble.
If you sell one board lot at market price and I have a buy limit order for $1, and there are no other orders in the system, the price will be $1 until the next trade. It happens on stocks with tiny circulation. I've seen it. That means the market cap is $1 * the number of shares until the price changes. While this is rare, it is something to keep in mind if you have cashblaying around. You may wish to place a long term, low price, limit buy order. Alternately, you may wish to place a long term, limit price, sell order at a high price. There are so many people who only place market orders that these techniques work, on rare occasion.
Thank you for the detailed explanation. So I need to look at the same thing that most buys look at to determine the worth of the company. So a stock is $100 and the investor decides to buy. What did they look at? I know people buy the dip and also look at the news. I don"t know all the things of how they are weighted, but that would nice to know to maybe determine if the price will go up.
