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Why does share price go up in spite of tremendous selling pressure? I shorted one share after seeing one share where selling was three times more than buying but it went up.

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    Can you provide the volume numbers that depicts tremendous selling pressure as well as 3x more selling than buying? – Bob Baerker Apr 15 at 11:30
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    "selling was three times more than buying " The number of shares sold is always exactly equal to the number of share bought. Do you mean there were three times as many asks as bids? – Acccumulation Apr 16 at 18:17
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The drop you anticipated had already taken place by the time you shorted the stock. Given the extra selling pressure, people were trying to sell at a lower price than they otherwise would have and people were buying at a lower price than they otherwise would have. You shorted the stock after the price had already dropped as a result of this imbalance.

If you think about it, why would this information have a delayed effect on the stock? Everyone knows the same thing you know -- why would they wait and act on delayed information instead of acting immediately on what they already know?

To a first approximation, the following assumptions are mostly true at the instant you placed your short:

  1. All traders had access to all publicly available information about the stock.
  2. You didn't have access to any information about the stock that wasn't public.
  3. The market is reasonably efficient.
  4. The buy/sell spread was fairly tight.
  5. No shares were being traded at that exact same instant.

This means that everyone, with the information you had, agreed that the mid-market price was fair given all the publicly available information. If anyone thought the price was too low, they would be buying and, per 5, they weren't. If anyone thought the price was too high, they would be selling or shorting and, per 5, they weren't.

Therefore, the price at the time you shorted already took into account the selling pressure. Any downward effect that would have on the price necessarily already took place.

  • Most likely there were plenty who thought the price was too high (but had already gone as short as they dared to, given that they might be wrong), and plenty who thought the price was too low (but had already bought for all the liquidity they were willing to risk on that hunch). – Henning Makholm May 19 at 16:01
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From your question, it appears that you are talking about Total Number of Buyer and seller ( in the bidding area ).

First of all, this is not the right criteria to buy or sell a stock. For buying and selling a stock for generating profit you need to understand whether you are an investor or trader or arbitrager.

If you are an Investor, then you should take knowledge of Fundamental Analysis. Here my meaning with Fundamental Analysis is not from just jumping on to the Balance Sheet of the company. I mean the business analysis. Whenever any investor want to invest , he should first look for the business whether product is good or not, whether it can be expanded or not. Company intention to expand. Thereafter it comes to analyze Balance sheet where we see Debits, Assets, Cash Flow, Revenue etc to analyze the growth of the company. Now it is time to wait for the right price and time to come to invest in such companies.

If you are a trader, then you should learn screen trading or technical analysis of share chart for trading. However, if you learn Fundamental Analysis along with technical Analysis then you can trade well in the stocks.

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