The Stock Market Pillar: Buy and Sell

The foundation of economy is supply and demand. there will be someone who will supply good (seller) and services and the parties who demand (buyer) for it. The price of good and services are determine by the forces of demand and supply. The price of good and services will be determined at the point of agreement between willing buyer seller and willing buyer. This sample is free market definition. Of course, in some cases, price is being controlled. Example, petrol price in Malaysia is regulated by Malaysian Government.

Demand and Supply Equilibrium

Whatever happen in world economy will be reflected in Stock Market. What is being traded in stock market? The product that is being bought and sold is called Stock (Definition: What is Stock?) Just like economy, price of a stock is determined when there’s a willing buyer and seller at the agreed price. If there’s no agreement, no transaction will happen; no stock ownership is transfer between 2 parties. The mechanism of buy and sell has been computerized. The stock price is very volatile, it moves up and down on daily basis. In some stocks, price doesn’t move much.

 Let’s have a look how does this buy and sell is done in stock market particularly Bursa Malaysia. Bursa Malaysia is the exchange where a stock is being traded. Since I am one of the CIMB customer, what you will see is the screen shot on my trading account with CIMB. There are plenty of investment broker in Malaysia. You can choose to open with any of them. The brokerage fee is more or less the same. All brokers in Malaysia are now operated online and can be accessed in the internet.

I guess the screenshot is pretty self explanatory: Stock Name, Code, Quantity, Buy price, Sell Price. Stock is traded in lot: Odd and Normal. For normal lot, 1 lot = 100 units of shares. For odd lot, it represents the individual unit of share. Most of the time, investor or trader in Bursa Malaysia do not trade stock using odd lot. Screenshot below will tell more:

1. Stock name is PADINI (Padini Holding Berhad is one of retail brand store in Malaysia that manufacture and sell apparel for men, women and children)
2. # = the number of queue for buyer or seller
3. B/Qty. = Buy quantity offer – quantity lot for buying , S/Qty = Sell Quantity offer – quantity lot for selling
4. Buy = Buyer offer price
5. Sell = Seller offer price

Row No.1 Explanation:

There’s one buyer willing to buy PADINI stock at the price of RM1.92 at 30 lots (3000 units of shares), 4 willing sellers want to sell 730 lots of PADINI share at RM1.97.

This is how the stock transaction is done in Stock Exchange (Bursa Malaysia). Buy and sell is the easiest part. This buy and sell is no different from what you buy groceries at stores or hypermarkets. You will only buy rice/vegetables/cooking oil at the price you want and the seller only want to sell at the price they want. If both parties agreed, then the transaction is completed. Transfer of good move from seller to buyer.  Buying/Selling  a stock or share is buying the ownership of a company.  But the difficult part is when to buy a stock? at what price should we buy/sell it? In order to make money, you have to buy at a low price and sell at a high price. Till then, see you in the next topics.