Why do prices go up or down? 📈📉

Why was Apple worth €150 yesterday and €148 today? 🤔 Why does EUR/USD (the euro-dollar pair, i.e. the price of the euro in dollars) rise on Monday and fall on Friday? What moves prices is actually quite simple: it's you and millions of others who buy or sell.

🎯 What is it exactly?

Prices go up or down because there's an imbalance between those who want to buy and those who want to sell. It's exactly like at the market: if everyone wants strawberries and there are hardly any left, the farmer raises the price. If no one wants any, he lowers his price to sell.

On financial markets (stock exchanges, forex which is the currency market, cryptos, etc.), it's the same. Demand and supply create the price. No magic formula: just basic economics.

⚙️ How it works

Imagine you buy one share of Tesla stock (a small part of the company). If 1,000 people want it right now, but there are only 500 for sale, the price goes up. Sellers say: "I'm selling at €250" and buyers reply: "OK, but don't complain if tomorrow I negotiate at €245".

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Concrete example: let's say you see a BTC/USD (Bitcoin in dollars) price at $42,500. Suddenly, the Central Bank announces some good news about the economy. Boom! All investors want to buy Bitcoin. There's more demand than supply. The price quickly climbs to $43,000, then $43,500. That's because buyers are willing to pay more to get their Bitcoins before it goes up again.

⚠️ Mistakes to avoid

Mistake 1: Thinking that prices are falling "because it's Tuesday". No! There's always a reason: an economic announcement, a political decision, a rumor about a company. Learn to look for the info behind the movement.

Mistake 2: Believing you control the price. You're just reacting with the other traders. If everyone runs away because of bad news (negative information), the price falls, even if you think it's a good deal.

Mistake 3: Ignoring economic news. Interest rates (the cost of borrowing money), inflation (price rises), elections... all massively influence prices.

Economic news.

✅ To remember

• Prices rise when more people want to buy than sell (demand > supply).
• Prices fall when more people want to sell than buy (supply > demand).
• News, announcements and traders' emotions move supply and demand.
• There is no such thing as a "fair" price: it's simply the price at which a buyer and seller agree at that precise moment.

🎬 Pour aller plus loin

Si tu veux approfondir ce sujet et progresser en trading, retrouve nos vidéos éducatives gratuites sur La Trading School 🎥