eli5 How is the ticker price of a stock decided when there are multiple trades of a stock happening at the same time?
In: Other
The ticker price is usually the price at the last trade that were registered. In some cases it can be the average of the highest buy offer and the lowest sell offer.
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Hey, thanks for this. Also, what if I want to sell a stock but there’s no buyer for it? What happens in the case?
There isn’t one price for a stock. There’s a bid price (what someone is willing to pay) and an ask price (what someone is willing to sell) when those overlap trades are executed. The last price is the price of the last executed trade. The last price is what’s typically shown in the ticker.
Source: fintech software engineer for over 15 years.
nothing really happens at the same time …
trades are executed in order, technically each trade is a tick on the ticker.
but for active stocks this needs to be aggregated
At any given time there are multiple bids to buy a certain number of stocks at a given price as well as multiple offers to sell various amount of stocks at certain prices. The orders are filled until there are no more matching prices, many orders do not get filled. The ticker price for the stock is just what the price is between the lowest offer and the highest bidder.
For high volume stocks this difference is usually very small and there is a large amount of stocks available to exchange, but for low volume sometimes the spread can be quite large with a very small amount available for each bid/offer so someone making a large market order (as in buy x amount at whatever available price) they may end up buying significantly above or selling significantly below what the ticker price was at.
A lot of these bids and offers can sit around for weeks or months. If there is suddenly a massive and unexpected increase in the amount of volume of trades they may “halt” a stock for a few minutes to sort out all the trades to make sure they’re done properly and in order before resuming. During which the ticker would also be paused and wouldn’t update until they resume trade.
easy. there is no “at the same time” only one transaction is executed at a time and their timing is tracked precisely using gps and atomic clocks
The trades execute in order, they don’t happen at the same time. So the stock price is the last price someone paid to buy it.
Technically it’s based on the last trade registered. Not so technically it’s based on what market makers want it to be. In other words the ticker price is based on shennanigans.
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