On a digital, computational level, what actually changes stock/currency prices?


I understand that of course currency and stock prices can change as a result of a multitude of factors, financial ones and socioeconomic ones.

But some computer program must change the numbers we see on the screen when we look up a stock price? They’re constantly changing so surely there are programs written to make those changes? But who is running those programs? How do they access news reports when there’s bad news and make the prices go down?

In: Economics

The stock prices are what the last trade of the stock occured at. This is reported by the exchange where the trade took place. When you look at the stock price, it is simply the last trade that was conducted.

The exchanges are companies that, well, what their business is, is running a stock exchange, you’ve probably heard of them, things like the NY Stock Exchange or NASDAQ or London Stock Exchange..

I’m not sure what you’re asking about “news”. Thats not relevant here. You’re just asking about how stock is traded and reported. The exchanges just make stock trades, they’re not news outlets

When you go to buy stock, you can put in whatever price you’re willing to pay per share, and how many shares you want to buy.

When you go to sell stock you can put in whatever price you’re willing to accept, and how many shares you’re offering.

When the sell price is less than or equal to the buy price, the transaction happens and the price gets updated.

Unless that trade happens off market in a dark pool and then the trade processes without impacting the stock price.

The programs updating those numbers are owned and operated by the stock exchange and the various stock brokers which allow investors to buy and sell. But they do not drive the changes in the values of the stocks themselves. The changes happen because the stock brokers allow investors to set rules when to buy and sell. Many will have set up their account to buy or sell when the stock reaches a certain price. Those eventually get matched up to determine the actual sale price and thus current value of the stock.

So let’s say a stock is worth $100/share. This means the latest completed trades were bought and sold for $100. But then bad news comes. The stock exchange itself doesn’t do anything, but investors who own the stock may put in more sell orders while other investors stop putting in higher buy order, altering them to be lower or removing them all together. Eventually, all the buy orders at $100 have been fulfilled, so if the sellers want to make matches to buyers, they have to change their orders to allow to sell at a lower price. So some sellers change theirs to $99, allowing them to offload their stocks until all the $99 orders are filled. This continues downward until it reaches equilibrium again with buyers and sellers reliably finding matches again, establishing a new value for the stock.

There is a list of buy and sell orders in place for nearly every stock on the exchange.

Say for example a stock is currently sitting at 5 dollars, there would be a list that looks like this

4.99 50k———-5.01 25k
4.98 300———-5.02 13k
4.97 21k———-5.03 118k

That basically shows you how many orders there are and to buy/sell at a particular price, with the buy and sell spread being at 4.99 to 5.01, this sets the price at 5.00, as there are people both buying and selling at 5.00, once one side runs out of orders the price moves in its direction and buying/selling continues.