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Anonymous
Anonymous asked in Business & FinanceInvesting · 1 month ago

When there is a big stock market sell off who are the buyers?

That's the part I don't understand. If the market sells off broadly aren't there equal numbers of buyers?

9 Answers

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  • A.J.
    Lv 7
    1 month ago
    Favorite Answer

    It is better to understand what occurs.

    Each transaction has a seller and buyer at a price.

    The buyer wants to pay the least possible.

    The seller wants the highest possible price.

    When the highest minimum buy meets the lowest sell it is matched to become a transaction. The "market price" is the last transaction, or the lowest seller minimum offer for the buyer, or the highest buyer maximum for the seller.

    When a lot of shares are traded in many transactions, you can track the price move.

    An order to a broker can be placed as LIMIT or MARKET.

    The seller can set a minimum and buyer can set a maximum as they put in the order.

    The broker, or computer in matching, does the best it can based on open orders.

    A MARKET order trades immediately to what is available.

    A LIMIT order may sit waiting for a buyer or seller to offer the price desired.

    Once this is understood, the question's answer gets easy.

    Stock sell off = More shares offered for sale pushing the price lower as matched to buyer's offers to buy. We don't have to say "equal number of buyers/sellers" but rather number of shares because one buyer or seller can offer many shares to match to multiple buyers or sellers. Each transaction is unique as a number of shares at a price. There is a buyer and seller in each transaction but could be the same buyer or seller for many transactions.

    Suppose I want to sell 10,000 shares of stock at market.

    One buyer may want 1000 shares at $50. The next highest buyer may offer $49.50 for 500 shares. The next buyer may offer $49 for 5000 shares. The next available buyer may offer $48 for 500 shares. Maybe another order for 1000 shares placed instantly at market and sells at $48. The price keeps falling until the order fills.

    If the seller said limit $48, maybe only a partial fill occurs, and other orders to sell match to the next highest buyer acceptable price.

    Again, for a transaction to occur, there must be a buyer and seller at an agreed upon price, but more shares to sell than buyer's offer to buy them pushes the price down until it is low enough for a buyer, and can drop to worthless. 

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  • F
    Lv 6
    1 month ago

    Big buyers are hedge funds. Don't ask me how it works. If I did I would be making millions with them.

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  • 1 month ago

    It's not just the number of buyers -- it's the price they're willing to pay, as a weaker market (for stocks) is not as valuable as it was even a few days ago.

    If you have a million shares that nobody wants to buy at $10, you see how many you can sell at $9, and so forth.

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  • Anonymous
    1 month ago

    I started picking at some stocks today, been waiting for a sell off so this is it.  If you aren't planning on selling anyways in the next several years, its not that big of a deal.  I still have quite a few stocks now that I bought in 2008/9 when financial collapse was occuring.

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  • 1 month ago

    When the market takes a large drop, many experienced  investors/traders take it is an opportunity to pick-up some cheap assets. 

    When a market is taking a beating it is always the professional on the other side of the trade, market makers/specialist must take trades, while experienced traders/investors seize the opportunity for bargins.

    Source(s): from The Street
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  • 1 month ago

    Me. I love a discount, I upped the riskiness on my 401K a bit, up the stock allocation a bit on another fund, contributed to another fund and dipped into cash a bit in my stock account.  Nothing major. 

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  • Anonymous
    1 month ago

    Me.   I love when stocks are on sale, and I am not alone!

    Also, there is a constant influx of money from large institutional investors.  Very, very few employees stop contributing to their 401k due to market volatility.  

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  • martin
    Lv 7
    1 month ago

    Buyers in that situation would have to be courageous people willing to take a chance, because when the market starts to sink, no one knows for sure how low it could go.

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  • 1 month ago

    People who see big sell offs as a buying opportunity.  

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