Do You Feel Share Prices Fall After You Invest In Stocks? Here’s The Reason – News18

A question that plagues most investors in the stock market is that why do the share prices come down as soon as they buy it? The investor, in this case, is usually the person who does not have much information about the company or its activities. Such stock investors are called common stock investors, who are mostly engaged in retail trading. The prices of shares keep changing throughout the trading hours. Some stock prices go up, while some decline. Daily traders use these varying prices to make more profit.

There are many factors which affect the change in the prices of shares. One of the reasons for the stock prices going down could be the demand and supply factor. It means when a large number of people start to invest in one share, the stock prices will go up because of the high demand; and if many are selling a stock together, its supply will increase, but prices would go down.

A retail investor comes to know about the stocks through a newspaper or a news channel. This is the time when traders want to earn profits. Now, the shares are being sold for expensive prices, which will go to common stock investors. The first and second tier investors start offloading shares or selling shares, which leads to a situation where there are more sellers and fewer buyers. Because of this, the prices of the shares could fall sharply. That is why, most of the time after someone buys the shares, the prices fall. It is a matter of investing at the wrong time. All common stock investors face the same problem, which keeps the stocks low for a while. After some time, the situation goes back to being the opposite, where the buyers are more and the number of stocks are less, causing the stock price to surge.

There is no formula or a fixed time for investing in a stock. A person has to do his research and analysis in order to know more about a company. This would help the investor in gaining knowledge about the shares, but it still does not imply that they will always profit from their investments.