Why is a stock with more buyers than sellers going down?

[Pete 1969]

Hi all, just a general question. I have a stock that shows most days that there are more buyers than sellers (actually every day for the past 35 days now) so for example it shows "33 Buyers for 985,578 units - 20 Sellers for 287,219 Units"

This stock is consistently in the example above and has not been reversed at all, yet it has dropped in price each day over the last 2 weeks???. I thought if there were more buyers than sellers it would tend to go up? I am surely missing something here.

I googled for the answer but it seems that no one asks this question.
Is there an easy explanation here?
Cheers,
pete

 

[skc]

Re: how does this work?

Hi all, just a general question. I have a stock that shows most days that there are more buyers than sellers (actually every day for the past 35 days now) so for example it shows "33 Buyers for 985,578 units - 20 Sellers for 287,219 Units"

This stock is consistently in the example above and has not been reversed at all, yet it has dropped in price each day over the last 2 weeks???. I thought if there were more buyers than sellers it would tend to go up? I am surely missing something here.

I googled for the answer but it seems that no one asks this question.
Is there an easy explanation here?
Cheers,
pete

What you are seeing is the cumulation total on the stock's market depth. It simply tallies the number of bids (people potentially wanting to buy) and offers (people potentially wanting to sell) at various price levels. It may or may not reflect ACTUAL buying or selling.

For instance, I can place 10m buy at 1c on any stock and change the buyer : seller ratio but obviously it doesn't actually has any bearing on the share price.

If you look at the market depth, the top 5 levels probably matters a little bit more, but even then there can be heaps of fake orders, icebergs, undisclosed size etc etc.

 

[Trembling Hand]

Re: how does this work?

Hi all, just a general question. I have a stock that shows most days that there are more buyers than sellers (actually every day for the past 35 days now) so for example it shows "33 Buyers for 985,578 units - 20 Sellers for 287,219 Units"

This stock is consistently in the example above and has not been reversed at all, yet it has dropped in price each day over the last 2 weeks???. I thought if there were more buyers than sellers it would tend to go up? I am surely missing something here.

I googled for the answer but it seems that no one asks this question.
Is there an easy explanation here?
Cheers,
pete

You are looking at useless info. It doesn't matter a bit what orders are sitting in the order book. All that matters are the orders that are actually being exchanged. In your case the orders are being constantly transacted at lower prices. That is what matters. There is equal amount of buyers and sellers (always) its just that the sellers are being forced to sell at lower prices to make a trade. That is a bad sign.

 

[AlterEgo]

Re: how does this work?

I thought if there were more buyers than sellers it would tend to go up? I am surely missing something here.

No, it doesn't work like that. You're missing all the other orders that are going through at market. They won't show up in the market depth.

 

[merlinnn]

Good question and great answers, I've often wondered the same thing myself.

Thanks

 

[againsthegrain]

It is like a house selling at a auction at below the reserve. The highest bid is in, the vendor has the option to accept it or deny it however the vendor choses to give in and accept the lower offer then what their reserve was.

The house next door may have sold previously for what the current reserve was but now there is no buyers willing to offer that price.

 

[Pete 1969]

I am still confused. I guess my question is if there are more buyers consistently at a ratio of say 3 to one every day for over a month, shouldn't that stock still go up? even if some buyers are buying a little cheaper?

 

[Trembling Hand]

I am still confused. I guess my question is if there are more buyers consistently at a ratio of say 3 to one every day for over a month, shouldn't that stock still go up? even if some buyers are buying a little cheaper?

For a price to move up the "buyers" have to actually buy higher. They are not. They are sitting there NOT buying. That is why they are still in the order book.

They are potential buyers waiting for lower prices.

 

[CanOz]

I am still confused. I guess my question is if there are more buyers consistently at a ratio of say 3 to one every day for over a month, shouldn't that stock still go up? even if some buyers are buying a little cheaper?

You would be better of knowing how trades were executed at the bid or offer. What is showing in the depth often has no relevance to what the price actually does as its the off market orders that can move an equity.

 

[tech/a]

I am still confused. I guess my question is if there are more buyers consistently at a ratio of say 3 to one every day for over a month, shouldn't that stock still go up? even if some buyers are buying a little cheaper?

No, it doesn't work like that. You're missing all the other orders that are going through at market. They won't show up in the market depth.

AE has answered.
Trading is done at market without even listing in depth.
Buyers and sellers.
I see T/H and Can have also made similar points.

So to will be "potential sellers"--some anyway.

 

[Pete 1969]

ok,
thanks guys.
I appreciate the feedback.
Pete