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Solid ECN Securities | Best Place to Trade CFD Products
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[QUOTE="SOLIDECN, post: 208910, member: 80239"] [JUSTIFY][img]https://i.ibb.co/WfMRxF6/broker.png[/img] Have you ever wondered what happened to your socks when you put them into the dryer and then never saw them again? It's an unexplained mystery that may never have an answer. Many people feel the same way when they suddenly find that their brokerage account balance has taken a nosedive. Where did that money go? Fortunately, money that is gained or lost on a stock doesn't just disappear. Read to find out what happens to it and what causes it.[/JUSTIFY] [LIST] [*][JUSTIFY]When a stock tumbles and an investor loses money, the money doesn't get redistributed to someone else. [/JUSTIFY] [*][JUSTIFY]Essentially, it has disappeared into thin air, reflecting dwindling investor interest and a decline in investor perception of the stock.[/JUSTIFY] [*][JUSTIFY]That's because stock prices are determined by supply and demand and investor perception of value and viability.[/JUSTIFY] [/LIST] [JUSTIFY][img]https://i.ibb.co/0FdBsC8/1.png[/img] [B]Disappearing Money[/B] Before we get to how money disappears, it is important to understand that regardless of whether the market is rising–called a bull market–or falling–called a bear market–supply and demand drive the price of stocks. And it's the fluctuations in stock prices that determines whether you make money or lose it. [B]Buy and Sell Trades[/B] If you purchase a stock for $10 and sell it for only $5, you will lose $5 per share. It may feel like that money must go to someone else, but that isn't exactly true. It doesn't go to the person who buys the stock from you. [img]https://i.ibb.co/DwLxKRP/2.png[/img] For example, let's say you were thinking of buying a stock at $15, and before you decide to buy it, the stock falls to $10 per share. You decide to purchase at $10, but you didn't gain the $5 depreciation in the stock price. Instead, you got the stock at the current market value of $10 per share. In your mind, you saved $5, but you didn't actually earn a $5 profit. However, if the stock rises from $10 back to $15, you have a $5 gain, but it has to move back higher for you to gain the $5 per share. The same is true if you're holding a stock and the price drops, leading you to sell it for a loss. The person buying it at that lower price–the price you sold it for–doesn't necessarily profit from your loss and must wait for the stock to rise before making a profit. The company that issued the stock doesn't get the money from your declining stock price either. [url=https://ibb.co/5vRxpqN][img]https://i.ibb.co/S037Yqh/3.png[/img][/url] There are investors who place trades with a broker to sell a stock at a perceived high price with the expectation that it'll decline. These are called short-selling trades. If the stock price falls, the short seller profits by buying the stock at the lower price–closing out the trade. The net difference between the sale and buy prices is settled with the broker. Although short-sellers are profiting from a declining price, they're not taking your money when you lose on a stock sale. Instead, they're doing independent transactions with the market and have just as much of a chance to lose or be wrong on their trade as investors who own the stock. In other words, short-sellers profit on price declines, but it's a separate transaction from bullish investors who bought the stock and are losing money because the price is declining.[/JUSTIFY] [URL='https://solidecn.com/Account/Register'][ATTACH type="full"]21736[/ATTACH][/URL] [HR][/HR] [B]Solid ECN brings vital advantages for forex traders in the US, EU, and beyond. High levels of transparency mean price manipulation is impossible[/B] [URL='https://solidecn.com/?utm_source=earnforex&utm_medium=paidpost&utm_campaign=feature'][B]solidecn.com[/B][/URL] [HR][/HR] [URL='https://www.instagram.com/solidecn/']instagram[/URL] | [URL='https://www.facebook.com/solidecn']facebook[/URL] | [URL='https://twitter.com/solidecn']twitter[/URL] | [URL='http://www.linkedin.com/in/solidecn']linkedin[/URL] [/QUOTE]
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