I think an easier way to say it is, people sell the stocks so they can get out of the market and have cash again. If a stock is priced at $60. Let's say there are 50 people buying it at $59.99 and 50 people selling it at $60.01. In this situation, the stock price stays stable because the buyers and sellers offers are not intersecting.
If all of a sudden there's good news, and 100 people decide to buy the stock for 60.01, those 50 sellers immediately get their orders filled. Now, there is no one selling the stock for 60.01 and 50 of those buyers will have to raise their price if they want the stock.
The same thing can happen if there's bad news. If people panic from bad news, and 100 people decide to cave and sell for 59.99, 50 people will get that price, and 50 people will not get their order filled and be forced to go lower because they ran out of people who were selling it for 59.99.
A shorter way to say this is there's a gap between the buying and selling price, and when the buyers cave to the sellers, the price increases because the buyers are agreeing to pay a little more to the sellers. When the sellers cave, the price crashes because the sellers are agreeing to take less for what they have.
So in essence, the seller gets what went poof?
I think an easier way to say it is, people sell the stocks so they can get out of the market and have cash again. If a stock is priced at $60. Let's say there are 50 people buying it at $59.99 and 50 people selling it at $60.01. In this situation, the stock price stays stable because the buyers and sellers offers are not intersecting.
If all of a sudden there's good news, and 100 people decide to buy the stock for 60.01, those 50 sellers immediately get their orders filled. Now, there is no one selling the stock for 60.01 and 50 of those buyers will have to raise their price if they want the stock.
The same thing can happen if there's bad news. If people panic from bad news, and 100 people decide to cave and sell for 59.99, 50 people will get that price, and 50 people will not get their order filled and be forced to go lower because they ran out of people who were selling it for 59.99.
A shorter way to say this is there's a gap between the buying and selling price, and when the buyers cave to the sellers, the price increases because the buyers are agreeing to pay a little more to the sellers. When the sellers cave, the price crashes because the sellers are agreeing to take less for what they have.