There are two main ways to make money in the stock market. The first is through dividends paid to shareholder. When a company has high income, they might decide to give some to the shareholders. As an example, if a company decides to pay 25 cents for each share each quarter and you had 100 shares, you'd get $25 a quarter or $100 a year. You can also make money through capital gains when own stock. If you had 100 shares of stock that you bought originally for $5 per share, you paid a total of $500. If the price goes up to $8 per share and you sell it for a total of $800, you'll make a capital gain of $300. The stock prices change according to supply and demand. When a corporation sells stock at a $4 per share price and they are selling 100,000 shares, if exactly 100,000 shares are bought and in demand, the price will stay the same because there is exactly enough supply for the demand. On the other hand, if there is a demand for 200,000 shares and only 100,000 are available, they will need to increase the price. In this case, more people are looking to purchase the stock than there is stock actually available. They need to increase the price of the stock in order to make less people willing to buy. The same goes if there was a smaller demand, they would have to lower the price. Let's use a department store selling jeans as a real world example for supply and demand. If they are selling 30 pairs of jeans at $50 each and only sell 10 pairs in the first week, they will need to bring down the price so that more people begin to buy the jeans. With a lower price, more people can afford them and will be willing to buy them. If instead they put out 30 pairs of jeans and they were gone in a day or two, if they had more to sell, they should increase the price. This way, less people will be willing to buy them so they wouldn't run out, and they would make more money. This is what is good about increase demand, they can sell more and sell them at a higher price.
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