What’s the ‘need’ for the stock prices to change every minute?
In: Economics
What typically happens in a market for a particular share is that there is an “open order” list. There is a list of buyers offering to purchase certain quantities of the stock at various prices. There is also a corresponding list of sellers willing to sell some quantity of this stock at various prices. When there is a “match” between a buyer and seller, the trade “clears” ie a buy-sell transaction occurs. (Note: a lot of this happens electronically nowadays although there are actually floors where this happens by human traders calling out)
Since this list is dynamic and trades happen all the time (ie every few milliseconds – electronically) the latest “cleared” trade is reflected as the current price. So the price is updated every trade. This price reflects most recent “past” trade so it is no guarantee that any buyer or seller can immediately achieve the same price in the future (even if that future is a fraction of a second later).
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