I get that supply and demand sets the price but WHO actually dictates the price?
Like do a special group of brokers negotiate a price, make a transaction and then that is the price on the market? Is it an algorithm and if so How did this work before computers
In: Economics
The number quoted as “the price of stock A” is the price of the last public transaction.
If I sell my stocks in A for $10.00 and someone is willing to buy for this amount, the price of stock A is $10.00.
Supply and demand do not influence the price directly, but instead change the willingness and amount of buyers and sellers. On good news payers are willing more to pay more and seller think their stock is worth more. So the next transactions will cause the stock price to rise.
And to be complete: The above is only true for liquid stocks. If only few people want to buy and sell, there are too few transaction to determine the price. In that case there are special market makers. These are people willing to buy and sell for a price they themselves set. As a non-market maker, you can either accept the price or walk away.
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