unconfuse yourself
Basic things such as bid/ask spread, market orders & closing prices are frequently misunderstood. I myself went through phases where I thought I understood these things, until further misunderstandings arose. I will break them down here.
USA market indices (most popular) and what they mean
• measures the stock performance of 500 large companies publicly listed on stock exchanges in the United States • considered one of the best representations of the U.S. stock market • though all companies in it are listed in the USA, it includes many multi-national companies • companies in the index derive on average only about 70% of their revenue in the USA • capitalization-weighted: the 10 largest companies in the index account for 1/5 of its performance • not necessarily the 500 biggest companies listed in the USA; there are many rules governing how the components are selected, including that they cannot be ADRs and ETFs • associated with many ticker symbols, including: ^GSPC, INX, and $SPX, depending on the source • popular...
Opening/closing price, % change, daily change, percentage points
When we study charts, we are usually concerned with 4 main prices for each candle: open, close, low, high. Even if you’re just passively watching your stock performance over many weeks, you are still tracking its price, and each day you see that the price changed by some $ amount, which is also expressed in %. But which price is being talked about here?
Bought up / sold off, buying/selling pressure, bid/ask, spread, market & limit orders, what price is shown on a chart
Frequently, much confusion arises when people say that the market or a stock are sold off or bought up, since, ultimately, there is a buyer and a seller on the ends of all transactions. So, what does “sold off” even mean? The important thing here is to understand that there are essentially 2 categories of orders you can make on the market: a limit order and a market order. A limit order is made when you specify the precise price at which you want to buy or sell a stock. The buyer’s price is the bid price (think of a bidder at an auction, who sets the price he wants to buy the item at), while the seller’s price is called the ask price (how much money he is asking to receive for his asset). These are the very bid/ask prices that you see...