
Ask HN: How stock price is determined? - azizsaya
This may be a naive question! How is a stock priced ?<p>I know the usual demand and supply bit [0].
I need help in understanding how a stock trading at $25 goes to $26 or $24.<p>[0] https:&#x2F;&#x2F;www.investopedia.com&#x2F;ask&#x2F;answers&#x2F;12&#x2F;how-are-share-prices-set.asp
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OzzyB
Market Makers.

These are the guys that "make the market". It's their job to buy and sell the
shares they manage (are market makers for).

This is why you can open an order for stock X and always get filled -- it's at
the price _they_ set.

This means you don't have to wait (for days/weeks?!) for a buyer/seller for
that block of shares you want to sell/buy -- you buy/sell them to a market
maker and they take it from there.

These guys run a "book" of orders and it's based on this that they offer
prices, their goal is to have a balanced book and not be overtly long or short
a particular stock, but they do for certain periods of time (think during the
day's open trading session).

In practice you'll discover that MMs have ultimate power is guiding a stock's
price, they can hold buys and sells until it's optimal for them.

Essentially, you're not competing against other buyers/sellers in a free open
market, but against MMs who hold all the cards.

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FormFollowsFunc
The stock exchange matches buyers and sellers. The stock price is the average
price the stock was trading that day. You can sell stock at any price but if
it's too high you won't have many buyers.

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azizsaya
Lets say I own a single stock of xyz co, stock is at $25 and I as an ambitious
seller decide to sell it at $50 and by a stroke of luck someone makes a fat
finger error enters a buy order at $50.

will the stock price tick to $50 for that one transaction ?

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meric
It’s a double sided auction so someone who have a sell order at $26 will have
priority (Assuming his order has the lowest price), and the stock will tick to
$26.

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billconan
They have a data structure called order book
[https://en.m.wikipedia.org/wiki/Order_book_(trading)](https://en.m.wikipedia.org/wiki/Order_book_\(trading\))

To match buyers with sellers

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gigatexal
Isn’t it just the present value of future cash flows

