What determines the amount a stock goes up or down?

I know that stocks go up when more of them are bought, and they go down when more of them are sold, but how is the price of the stock determined? Is it automated or do the big wigs in the company just randomly say "well, since the public bought 50 million shares of our stock yesterday, I think I'll increase the price of the stock by 4%"?

And if there is a formula for it, is it different for every company? If possible, show me how a company would figure the price of this stock:

Stock for the company "eifjsl"

Price today: $25.00
total stocks owned by public today: 20 million total
total stocks owned by public at end of day: 23 million total
Price at end of day: ?
Additional Details
Sorry, but I don't think anyone understood my question. I stated quite plainly that I know "why" stocks go up and down, supply and demand; I am asking what determines the exact amount they go up and down. Like I said, I know that if more people want a stock the price will go up, I'm asking how much it will go up.

The company is normally out of the picture when it comes to the daily market for shares.
A share is a part of a company, so if a company has 1 million shares outstanding people own those shares. Some of the shares are owned by mutual funds or pension plans. People buy and sell shares based on what they think will happen next, or to respond to something that already happened or because something changed in their life.
Often a company will beat or fail to make expected profits or predict future profits of more or less than people expected. Then fund managers or investors will decide the stock is good to buy or sell and put in buy or sell orders.
A market maker will see all the orders and set the price to make trades, when more people want to buy than sell the price goes up when more want to sell the price goes down.
Many people live on investment income so will sell some and when they see the price go up might sell more or when they see the price is down might buy more.
It is between the mutual funds and investors and the company is only involved if they issue new shares or buy back some for their treasury.

Stock is sold in a form of auction

If a lot of people want it bad enough, they bid the price up

If nobody wants it, and people want to sell, someone might pick it up at what they percieve to be a bargain, but at a lower price.

Note the stock tables on Yahoo -- there is a column for Bid and asked price. The real price is someplace in the middle

The "big wigs" dont have anything to do with the price of the stock, after it goes public. The company has nothing to do with the price then, after its traded in the secondary market, which is what the stock market is. There is a bid and ask price set by the market makers and investors determine if they will buy or sell stock at those prices. The price changes accordingly. And what investors are willing to buy and sell a stock at is determined by the future expected cash flows, i. e. the earnings, of the company. And this changes with information and news that emerges about the company. Think of it like a used car dealership where the dealer holds an inventory of used cars and determines what he will buy or sell a car for. Then the potential buyer bargains with the dealer until they determine a final price.

Okay, here's how it works. You have people you want to buy the stock, and they put in orders to buy, and you have people who want to sell their stock, and they put in orders to sell.

Let's take a $10 stock for example. Let's say that I want to buy 100 shares, but I only want to pay $9.99, not $10, so I put in an order for 100 shares at $9.99. Now there may be other people who also would like to buy shares at $9.99 a share, and they put in their orders. So there are a certain number of buy orders at $9.99. Now there may be other people who are only willing to pay $9.98 per share, and still others who are only willing to pay $9.97, and so on. These are the people on the buy side.

Now the same thing occurs on the sell side. Someone may be willing to sell their shares, but they want $10.01 per share, and others may want $10.02 per share. and still others may want $10.03 per share, and so on.

Now if there is a buyer who wants shares badly enough, he may step in and buy all the shares available at $10.01, so now the lowest price on the sell side would go up to $10.02, and the share price would move up to $10.01, which is the price of the last sale. Now someone might buy up all the shares available at $10.02, which means the sell side would go up to $10.03, and the official stock price would go up to $10.02. If there are enough people who want to buy the stock they will continue to drive the price up until it gets so high that no one is willing to pay any more. In this way the stock price goes up.

The exact opposite happens when the stock price goes down. Someone may want to sell his shares badly enough that he is willing to sell them at $9.99. Once all the buyers at $9.99 are used up, the bid side will fall to $9.98. When all the people willing to buy at $9.98 are gone, the bid side will fall to the next highest bidder. In this manner the stock price will move one way or the other, depending upon whether there are more buyers or sellers. Some stocks are very thinly traded, in which case neither the buyers nor the sellers are willing to budge, so the stock price changes very little, but most stocks are heavily traded, and there are constantly buyers and sellers moving the stock price up and down. If there are more buyers, the stock price goes up, if there are more sellers, the stock price goes down.

I hope that I made that clear. It's basically an auction with buyers and sellers.

hersay ,rumors, lies, investor confidence. i have a stock that was 124 dollars last year that split went to 65 dollars a share nows it at 8 dollars. and the company is still posting profits. i think stock market manipulation . terrible thing to base the economy on .

good grief charlie brown

ever heard of the law of supply and demand?

Enter Your Message or Comment

User Name:
User Email:
Post a comment:

Archive: Forum -Forum -Finance - Links - 1 - 2 - RSS - All RSS Feeds
The Causes and the Results. 0.014
Copyright (c) 2011 Financial Crisis Monday, May 28, 2012 - Terms of use - Privacy Policy