'Everybody' knows that prices are generally governed by offer & demand, but I am wondering on the details of the stock exchange here.

How are stock prices (the ones which are nicely listed every day in charts) are actually computed to a specific number based on various simultaneouse bids?

Do they change, if no transaction is actually taking place (but there are bids)? And how are concurring bids dealt with?


Its really quite simple, the stock price you're seeing is actually the last trade that took place, the different bids are tails of the suppliers and demanders - their maximal or minimal bids

In everyday trade the simultaneous bids arr very close, and the deals are happening all the time, more or less bids in a certain direction can point out market expectations, but in a range of minutes This applies to high volume markets, of course

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  • $\begingroup$ Thx. So to be sure: If say, a lot of people want to sell, but nobody buys, the stock prices would not fall, would they? (If there is no trade made.) $\endgroup$ – BmyGuest Sep 28 '18 at 14:05
  • $\begingroup$ If there is no trade made, then nothing happens... once one side "blinks" and a trade is made, then you can say something happens $\endgroup$ – Guy Louzon Sep 28 '18 at 14:07
  • $\begingroup$ Ok. Thx for clarification. And vice-versa: If some stock "lost value" it means that at least one trader actually sold for that price (and one buyer bought)? $\endgroup$ – BmyGuest Sep 28 '18 at 14:08
  • $\begingroup$ Sure. and yes, exactly so $\endgroup$ – Guy Louzon Sep 28 '18 at 14:17
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    $\begingroup$ The 'last price' is not the only approach to find the price. Typically when you hold an instrument and want to 'mark to market', ie use the market price, you Wil use the bid price, because that's the price you would be able to sell it at. When you want to buy an investment, or you are short, yous should use the bid price. Some systems also allow you to use the midpoint between the bid and the ask. $\endgroup$ – Hector Sep 29 '18 at 6:59

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