Why do prices move?

More want in than out

Two moments at the same price. In the first, more people want in than want out, so the price climbs until enough of them change their minds. In the second, the other way round.

At any moment, some people want to buy a share at the current price and some want to sell. If those two crowds are the same size, the price sits still.

When more people want in than want out, the buyers have to offer more to get anyone to let go, and each new agreement lands a little higher. When more want out than in, the sellers have to accept less, and the price slides. That is the whole engine.

What changes the crowds? News about the business. News about the world. Interest rates, a rumour, a big holder who needs cash, a mood that catches. Often a move has no reason anyone can point to, and the explanation you read the next morning was written after the fact.

And here is the honest part, which this book will say more than once: nobody knows in advance which crowd will be bigger tomorrow. Not the news, not the people on television, not the book you are reading.

Said with a food truck

A food critic posts a rave about your friend’s truck. Overnight a dozen people want slips, and only two owners are willing to part with one. The would-be owners start offering eighty, then ninety. The price of a slip climbs, not because the tacos changed overnight, but because the crowd wanting in got bigger than the crowd wanting out.

In February the engine dies and the truck sits in the shop for a month. Now owners want out and almost nobody wants in, and slips go for forty. And one Tuesday in between, slips jump five dollars for no reason anyone ever finds out. That happens too.

That is step three. The next chapter shows how all those agreements, one after another, become a picture you can read at a glance.

Nothing here is advice. The whole ladder is on one page; the app behind it is free to start - the door opens to any address. Education only. Pumpstradamus is a paper trading app: no real money is traded, and we are not a broker or an adviser.