Demand can be very well related to the need in the market. When something of nominal value gets high in demand, it usually gets attention. So, when the attention rises it draws masses towards. This time we can observe a price surge. This happens often in tradable assets. Let’s take an example of a particular stock.
Usually,
the price of the stock rises whenever good news is associated. This good news makes
traders bring attention. Risk-takers invest based on this soothing news,
which raises the price further. And soon it breaks the resistance and all retail
investors start investing making the price move even higher. Even after days
of news, it keeps the pace. Here people slowly start to form a consensus within
themselves that the price won’t go much higher when reaches this or that
point. Which makes people like him exit from there. When masses do this,
it slowly reflects in the price movements. This leaves a panic among the
general investors and they will start withdrawing money making the price stuck
thereby creating new resistance.
It is not only
the news that makes the price movement, also the contribution of peoples
consensus.
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