Explain what a trade requires that a strong opinion does not.
You are certain a share will rise. You place your order and it fills. What does that tell you about the person on the other side?
Yes.Every trade is a disagreement that has been settled by a price. Your conviction was necessary to buy, and it was not sufficient — somebody had to be willing to sell.
Not quite.Sometimes. Just as often they saw it and read it differently, or needed the money, or were rebalancing.
Not quite.Forced selling is real and it is the exception. Most of the other side is simply a different view.
A price is where two opposite opinions meet. For every buyer sure it is cheap, someone equally informed is selling.
Why might somebody sell a share they still think is good?
They need the money for something next month.
Their fund's rules cap how much of one thing they may hold.
They think it is good but fully priced.
They think the company is bad.
They want to realise a loss for tax before year end.
Yes.Only one of these is a judgement about the company. Most selling is about the seller — their timing, their rules, their taxes — which is why reading a price as a verdict on the business misreads most of what produced it.
Between the highest bid and the lowest offer sits the spread. Slide the number of active traders and watch it.
Very manyFewAlmost none
Best price to buy at420.5 p
Best price to sell at420 p
Very manyBuyers and sellers stacked at every level. You trade instantly at close to the quote.
Best price to buy at424 p
Best price to sell at417 p
FewA visible gap. Trading now costs you something before anything has moved.
Best price to buy at445 p
Best price to sell at398 p
Almost noneA wide, nervous gap. Any order at all moves the price.
What is the spread actually measuring?
Yes.A wide spread is the market saying it is not sure anyone will be there when you want to leave. That cost is invisible on a chart of prices and very real in a rush for the exit.
Not quite.A risky company can trade tightly if enough people trade it, and a dull one can have a wide spread if nobody does.
Not quite.Fees are on top. The spread is the cost of immediacy itself.
Move the control to see what changes.
A market maker quotes both a buy and a sell price all day. How do they make money?
Yes.Their business is volume and speed, not being right about the company. It is also why spreads widen the moment news is expected — that is when being the standing offer is dangerous.
Not quite.They try hard NOT to take a direction. Inventory is a risk to be managed away.
Not quite.Some do both. The spread is the core of the model.
Put in order what happens when your buy order arrives at an exchange.
Tap them in order — first to last.
Order arrives→Matched with the other side→Trade recorded→That becomes the price
The price is an output of trading, not an input to it.Yes.The last step is the one to remember. The 'market price' everyone reads is simply the most recent match — it is produced by trades, not consulted by them.
"There were more sellers than buyers today." What is wrong with that sentence?
Yes.What changed is the price at which they matched. Sellers were more eager, so they accepted less — the imbalance is in urgency, never in quantity.
Not quite.It is a very common phrasing and it cannot describe a market where every trade has two sides.
Not quite.Volume is also equal on both sides. Every unit sold was a unit bought.
Lesson complete
Every trade needs someone on the other side, and most selling is about the seller.