With stocks, one point is one dollar. Every stock has its own worth. The more popular the stock, the more people want to buy it, driving up the price. When people decide to sell their shares of stock in a company, others panic and start selling theirs. The price starts falling and new buyers arent willing to buy it at the current price.

The remaining owners want to get rid of it desperately, so they offer it for sale at an even lower price to attract buyers. And the price of the stock keeps falling. When everyone feels that the current price of the stock is at its lowest, the freenzy reverses and the price of the stock goes up. There is no one set price. Youll see the different prices of stocks. When the stock market closed , thats what the stock was selling at. How much money the stock went up or down in price, since the stock market first opened that day. The answer is yes you can make a good living doing it, but the average guy cannot do it. They may get lucky from time to time, but the average person is fighting the mathematics of the situation. Let me describe an example. 10 to the market maker. You still are not profitable. You are now at a loss, and so forth. Overcoming just 10 cents is hard in a short time period. To make day trading profitable, because you are depending on small change, you have to borrow a lot. You try and sell out, but the bid is only for 100 shares. You made a 1 cent profit and you are still on the hook for the rest. 05 in spread commissions plus any per unit commisions you may pay to your broker. 100 in debt and someone else got the dollar you were trying to make.

The maker is now only making a penny.

That is the dirty trick. 12 on a ten dollar gain, if you were careful and did a very good job. However, lets get back to the why question, why is the spread only one cent. When stocks go hot, they get overvalued and the market maker whose job is to hold inventory knows this and reduces inventory. Traders take up the inventory risk buy you carrying the inventory for the market. The risk is higher, but the market maker is carrying only a fraction of the inventory having sold it to day traders at a profit. 10 in profits held in an over valued stock, the maker actually is holding a lot of cash. They actually cashed out of the stock, down to a point they can still perform their function.