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 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.
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