The number on your screen is not what you think it is

Hello, this is Mike from Solvanta, LLC, the makers of Olympia. Today's lesson is about price — a real simple one. We're not going to talk about dojis or candlesticks until the next lesson. Price is nothing more than two people arguing over what they think a stock is worth at one point in time. This is a beginner's lesson, so let's keep it basic.

First, separate fact from opinion. A stock price is not a fact about the company. It's an opinion — the last thing two people shook hands on and agreed to. Get this straight and you're already ahead of most of the people staring at the screen all day long.

Look at this Logitech chart. At 3:59 Eastern Time, one minute before the close, the two sides agreed on 98.64. It finished up a little on the day, so the buyers won out over the sellers — and the day's in the books. Now think about what actually happened for that number to exist. Somebody was done and wanted out of the trade at 98.64. In that same second, somebody else wanted in badly enough to pay exactly that. Two people, opposite opinions, and they met. That number is the receipt of the meeting, nothing more. It doesn't say anything about the company. The company didn't get better in that second. It didn't get worse. Two people quit arguing, and the tape wrote it down.

So it's not a fact about the company. It's not what the company is worth. It's not a verdict. It's one trade, one moment ago, one slice of time — already over and in the past. That's why a price moves all day long when nothing about the business has changed. Same company, two days side by side, the business identical on both — and the number isn't. So what moved? The day before, it closed down sharply: sellers leaned on it harder all session, every trade printing a little lower than the one before. Nobody took a vote; that's just where the handshakes kept landing. Then, on the day we looked at, it ticked up a hair. Buyers leaned back. Same stock, same building, same people who punched the clock that morning. The factory didn't burn down overnight and rebuild itself by breakfast. What changed is who wanted it more. A price is just the running tally of that, one trade at a time, all day long — and once you see it that way, a lot of the fear comes right out of the chart.

Here's another name off the board, down hard on the day. Most people look at that and hear a verdict: this company is worth less than it was yesterday. That's not what it says. It says only one thing: right now, sellers want out more than buyers want in. That's the whole message. So why is it down? Maybe it's the business. Maybe someone had a tax bill. Maybe a fund has been unwinding a position for a month and today was the last of it. Maybe it's something geopolitical on the other side of the world. Whatever it is, the chart can't tell you which one. It doesn't know. All it knows is that the trades are happening lower.

So quit reading the number as the truth. Read it as an opinion — the most recent one, and one you're completely free to disagree with. The tape doesn't care how you feel about it, and it doesn't owe you a reason. It writes down what people actually did with their money. That's the whole job of the record.

Every number on the board is a last handshake. Somebody wanted out, somebody wanted in, they met, and that's what printed. All of it is useful — every bit of it is the record of a fight — and not one number on the screen is a fact about the company. The gap between the price on the screen and what it actually tells you is the whole job. Everything else you'll ever learn about the chart is just handshakes stacked one on top of another, going back as far as you care to look. The chart is the record of the fight. A price is a fact about a trade, not a fact about the company. Keep those two straight and you're ahead of most people in the room.

So learn everything you can about the company. Do your research. Go in with a plan. Never go into a fight without a plan.