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  1. #1
    Das it mane Vpac's Avatar
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    Really dumb question on Stock Market gains

    You're up on a share and decide to sell, who is actually paying you the profit you made? Like where did that money come from?
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  2. #2
    Registered User paulinkansas's Avatar
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    It comes from your brokerage company (Etrade, Ameritrade, etc). At the end of the trading day, all the brokerage firms settle up with each other through a clearinghouse.
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    Originally Posted by Vpac View Post
    You're up on a share and decide to sell, who is actually paying you the profit you made? Like where did that money come from?
    The "profit" is comes from an increase in value. Lots of buy orders wipe out lots of sell orders, the market value is now higher. The stock is now "worth" more and you sell the stock for more than you bought it. You now have x more dollars. Where those buy orders come from is a better question. Ponzi federal government? Nah, we are a free market, the fed would never just pump stocks like that right?
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    I'm still only about 90% sure of this answer OP, but basically if you buy 10 shares of a stock , $20 a share, you have $200 of value.

    if 3 weeks later the stock is priced at $30 a share , your brokers ( as mentioned above, E trade, TD ameri ) will allow you to sell it to " the rest of the market" but now it's worth more, $300 if you sell.

    Somebody, jo shmo or a corporation, is liking the stock enough to now pay a higher price.
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  5. #5
    Registered User headturner1's Avatar
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    What I’m still trying to figure out is who pays me when I sell at a loss?
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    Registered User AlexDeLasFlores's Avatar
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    I don't think the question was really answered. So you sell your stock at a higher value, who is paying for this stock? Another person? The company? Everyone says buy low sell high, so if everyone followed this 100%, when you stock is now really high, who wants to buy? Are you guaranteed to be able to sell your stocks at any time?
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    Originally Posted by headturner1 View Post
    What I’m still trying to figure out is who pays me when I sell at a loss?
    Your broker pays you. At the end of the day the buyers broker sends funds to your broker. The buyer of the stock usually has money in an account with his broker. So in essence the funds originated with the buyer. It is irrelevant whether you sell at a loss or a gain.
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  8. #8
    Trancebrah _zman's Avatar
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    Originally Posted by AlexDeLasFlores View Post
    I don't think the question was really answered. So you sell your stock at a higher value, who is paying for this stock? Another person? The company? Everyone says buy low sell high, so if everyone followed this 100%, when you stock is now really high, who wants to buy? Are you guaranteed to be able to sell your stocks at any time?
    The value of the stock has risen because of the gains the company has made through profit and innovations. Sometimes this is proven through book value, sometimes it's through perceived value, based on what a company says it's going to do etc. Depending on where the company is in their life cycle they invest that money back into the company, which raises that value of the stock. If the company is older they will typically return those profits to investors as dividends.
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  9. #9
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    It all seems like funny money to me sometimes but if someone else is willing to pay more for something than you did when you bought it that profit comes to you. The firm your are trading with will collect the money from them and give it to you once they have taken their fees
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