I understand how supply and demand works but I’m confused as to who actually is in charge of setting the price to display to all trading platforms. Since the stock price is constant across all trading platforms, what algorithm or system is in place to ensure there are no clashes or discrepancies between said platforms? Is there one dominating platform that monitors all stock prices which other platforms refer to such as the NYSE?
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Imagine you have a toy car that you want to sell to your friend. You decide that the car is worth $10, so you ask your friend if they want to buy it for that price. However, your friend thinks the car is only worth $5, so they don’t agree to buy it. This difference in opinion about the car’s value is similar to how stock prices change.
In the stock market, there are many buyers and sellers, just like you and your friend. When people want to buy a stock, they make bids, which are like offers to purchase it at a certain price. At the same time, others who own the stock want to sell it and make asks, which are like offers to sell it at a certain price.
The stock price changes based on what buyers are willing to pay (bids) and what sellers are willing to accept (asks). When more people want to buy a stock than sell it, the demand for the stock goes up, and the price tends to rise. On the other hand, if more people want to sell the stock than buy it, the supply of the stock increases, and the price usually goes down.
Factors like news about the company, the overall health of the economy, and investor sentiment can affect how many people want to buy or sell a particular stock. When good news comes out, like a company announcing higher profits, more people may want to buy the stock, which can drive up its price. Conversely, negative news can make people want to sell, leading to a decrease in the stock’s price.
In summary, stock prices change based on the constant interaction between buyers and sellers in the stock market. The balance between how many people want to buy or sell a stock determines its price, which can fluctuate based on various factors and changing opinions about its value.
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