It was a relatively quiet week (for me) on the stock market with share prices going up and down, sometimes with no reason and nothing realy happening.

So I took the opportunity to do some more study on the how the Stock Markets actually works and how it was being influenced.

I have come to the conclusion that the market is (dare I say) generally being manipulated/influenced by firstly the large institutions. Secondly by full time professional traders and day traders.

The general public and the “Mum and Dad” investors are the last to know what is actually happening and invariably the ones that lose out in the long run.

The advantage the Institutions have is the “Millions” of dollars that they have available to use.
Usually obtained from the public in the first place,in the form of Insurance,Superannuation,Managed Funds etc. Which we (the general public) all contribute to on a daily basis.

The large advantage they have is the enormous amount of shares they are able to purchase at any given time.
What occurs is that even a small movement in share price means big profits for them,because of the volume/turnover of shares which occurs whenever a share transaction takes place.

Now Volume is the “Fuel” driving the market. An uptrend in share price to survive and to continue must be nourished by new buyers who are being fed by cautious, seemingly reluctant sellers.

Consistent volume is very important, if there is to be any change in the existing trend. There must be a surge of buyers or sellers capable of changing the current share price.

Remember for every “Seller” there has to be a “Buyer” and vice versa.

The seller thinks or knows the share price is going down and the buyer thinks the opposite.

Now too much selling will invariably force the price downwards as will too much buying forces the share price upwards. The rule of supply and demand.

This “Law” is taken advantage of by the large Institutions who are well aware of what happens
when they buy/sell huge volumes.

A good example of this can be seen in a past article called ” Fortune Favors The Brave Sometimes” written last October.

There are a few other ways the market is being influenced which I shall leave for a future article.

The coming week as usual will be a surprise as I never know what is going to happen. I have to be patient as always. Isn’t it exciting??

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