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If the number of buyers and sellers has to be equal, because when one buys other sells, then how come there are times of buyers or sellers markets?

At any moment of trading what does it mean when the market has more buyers than sellers? Or vice versa?

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    One buyer may buy two hundred shares and there might be two sellers of one hundred shares each. There is no relationship between the number of buyers and sellers and it is not a metric that is tracked. – Pete B. May 14 at 15:05
  • As in your example,One buyer may buy two hundred shares and there might be two sellers of one hundred shares each. There is no relationship between the number of buyers and sellers and it is not a metric that is tracked.,. Will the market go up or down? – Reddit User May 14 at 15:12
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At any moment of trading what does it mean when the market has more buyers than sellers?

Think of it as an infinitely large open apple market with no published prices, where there are vendors selling apples ("sellers") and patrons buying apples ("buyers"). So there are an infinite "number" of buyers and sellers. The apples are all completely identical, so there's no difference in buying from one vendor or another.

There are two types of both buyers and sellers - those that demand a certain price (price makers) and those that will buy/sell at any price (price takers). If there are more "buy takers", that means that the "sell makers" will set the price, which will go higher (since the sellers can set higher prices to their benefit. This happens until the price is high enough that there are enough "sell makers" to satisfy the "buy taker". At that point an"equilibrium" is reached and the price will stay at that level until additional "takers" from either the buy side or sell side want to buy/sell.

The list of "makers" is indicated in the order book that shows the bids and asks with associated volumes - as "takers" fill orders to satisfy the bids and asks, the p[rice rises and falls accordingly.

So yes, for each individual transaction there is one buyer and one seller, but there will me more "takers" on either the bid side or the ask side, which determines the "market" price.

Practically, the number of participants is not infinite, but there are typically "market makers" that ensure that there are enough buyers and sellers to keep the market flowing. Only in very extreme times are there a limited number of buyer and sellers.

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If I am buying 1,000 shares and we're only considering round lots, I could buy 100 shares from ten people or all of the shares from one person. Therefore, the correct statement is that for every trade there is an equal amount of buying volume as there is selling volume, and vice versa (not buyers and sellers).

At any given time there may be an excess of buy volume attempting to buy shares or an excess of sell volume attempting to sell shares. Let's consider buy volume.

As each trade occurs, a buyer and a seller are matched. Since there is more buying pressure at current price, eventually it exhausts the pool of available shares for sale at current price. If no new sell orders come in at current price, the ask price moves up to the next price in the order book. If that process continues, the ask price will continue to rise.

At the same time, bidders will start raising their buy prices and the bid price will rise as well. Price will continue to rise until the aggregate amount of buy volume and sell volume evens out and then price will level out.

When aggregate sell volume exceeds buy volume, this process will occur in reverse and share price will drop.

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