So now that we have a handle on what ‘the market’ is from Part 1 of the series; Investing Psychology – Part 1: What ‘the market’ really is, let’s take a closer look at the machinations of price movements on the market. An important question to have answered first is;
Q: How is a share’s price determined and by whom?
A: The last transaction where a buyer’s price and a seller’s price was matched is the share price at that moment in time. You can see this in most broker systems as ‘Course of Sales’ or ‘Trades’ to see the last transaction that was executed for the company.
So the price is determined by ‘us’ and executed by the broker system connected to the ASX (Australian Securities Exchange).
I didn’t know this myself and until it just clicked into place after a year of investing.