| If you are going to invest in the stock market it | | | | If some fantastic company news breaks overnight |
| pays to understand as much as you can about how | | | | those $4.32 shares could end up starting the following |
| it works. In this sense you should know how the | | | | day being worth a lot more. It all depends on a |
| prices of each and every company's shares are | | | | number of factors that no one can ever really |
| influenced by various factors. | | | | account for. |
| One common misconception is that if a share closes | | | | Supply and demand also comes into play here. For |
| on a certain price one day - let's say at $4.32 for | | | | example let's say the company mentioned above has |
| example - that same share should open on exactly | | | | been going along steadily for some time, its shares |
| that same amount the next day. In truth it will | | | | never moving much from the $4.32 region. |
| happen much like this for most of the time. For | | | | Now supposing there are rumors that the company is |
| example it might close on $4.32 and open on $4.31 or | | | | going to develop a new widget that will revolutionize |
| $4.33. In short the price shouldn't change too much. | | | | the world in some way. Those rumors could result in |
| But on occasion it will change, and this is very | | | | more people wanting to buy those shares, because |
| important to understand when it comes to investing | | | | there is the potential for a good profit on them in |
| in the stock market and buying shares in various | | | | the future. That potential creates more demand for |
| companies. For example the company that is worth | | | | the shares, and thus the prices will go up accordingly. |
| $4.32 per share could end up discovering its board of | | | | If the demand drops off the price of the stock will |
| directors have been unlawfully getting up to | | | | tend to drop off as well. |
| something they shouldn't with company funds. If this | | | | So you can see that the daily prices of various |
| is the case and everyone gets wind of it before the | | | | stocks can be determined from a number of |
| market opens, those shares could be worth | | | | different factors. And while you may go to bed |
| significantly less than $4.32 each. | | | | thinking your stock is worth a certain amount, it could |
| Of course this is looking at the bad side of the coin. | | | | be a very different picture first thing next morning. |