Stock Market Share Prices Derivation
Discussion
How are share prices calculated?
And how was it done when they were using quills and parchment (eg for Corn Exchange trading)?
Today it's all computerised presumably, but what algorithm do they use?
I miss the days of watching traders chucking bits of paper on the trading floor, to be collected and written up after the market closed.
It all feels like watching a fixed video game these days.
Will be even worse when the AI bots are fully in charge.
And how was it done when they were using quills and parchment (eg for Corn Exchange trading)?
Today it's all computerised presumably, but what algorithm do they use?
I miss the days of watching traders chucking bits of paper on the trading floor, to be collected and written up after the market closed.
It all feels like watching a fixed video game these days.
Will be even worse when the AI bots are fully in charge.
What do you mean exactly? There's countless ways, of varying sophistication, to determine what you think a company or anything else is worth and base your decision to buy or sell it. But fundamentally the price you see ticking on the tape is just where supply and demand are meeting at a given point in time.
It depends what you mean by calculate.
You can make an estimate as to how much a firm is worth by estimating future cash flow both ways, working out how much you would have to put into a low risk bond to get the same return, then knocking a load off to allow for the increased risk. Then divide this value by the number of shares and that gives you what the share price ought to be on your assumptions.
If you conclude that the shares currently at 105 are a bargain you try to buy some. Hopefully someone else wants to get of theirs at 105, either they expect them to go down or are taking their profit to buy something else.
Your broker says 'has anyone got any for 100? Their broker says 'I can sell some for 110' and between them they agree say 108. Which is the share price until another sale takes place.
You can make an estimate as to how much a firm is worth by estimating future cash flow both ways, working out how much you would have to put into a low risk bond to get the same return, then knocking a load off to allow for the increased risk. Then divide this value by the number of shares and that gives you what the share price ought to be on your assumptions.
If you conclude that the shares currently at 105 are a bargain you try to buy some. Hopefully someone else wants to get of theirs at 105, either they expect them to go down or are taking their profit to buy something else.
Your broker says 'has anyone got any for 100? Their broker says 'I can sell some for 110' and between them they agree say 108. Which is the share price until another sale takes place.
2fa said:
Sorry, didn't explain it well.
I'm interested in how ticker prices are derived.
They change every couple of seconds but what precisely do they measure, and how do they do it?
It's probably very simple, but I don't know how it's done.
It's the last transaction, not really measuring anything.I'm interested in how ticker prices are derived.
They change every couple of seconds but what precisely do they measure, and how do they do it?
It's probably very simple, but I don't know how it's done.
Austin Prefect said:
2fa said:
Sorry, didn't explain it well.
I'm interested in how ticker prices are derived.
They change every couple of seconds but what precisely do they measure, and how do they do it?
It's probably very simple, but I don't know how it's done.
It's the last transaction, not really measuring anything.I'm interested in how ticker prices are derived.
They change every couple of seconds but what precisely do they measure, and how do they do it?
It's probably very simple, but I don't know how it's done.
This is why people doing technical analysis prefer candle charts with a volume channel, to gauge the true market depth of the observed price.
SitCet said:
Flash Boys book probably worth reading. The answer to your question is complicated... deliberately.
True, excellent book.SitCet said:
Flash Boys book probably worth reading. The answer to your question is complicated... deliberately.
And maybe thishttps://www.bankers-anonymous.com/book/book-review...
https://www.amazon.co.uk/Flash-Boys-Insiders-Persp...
2fa said:
Will be even worse when the AI bots are fully in charge.
Not sure what that means, but this is from 25 years agohttps://www.ntuzov.com/Nik_Site/Niks_files/Researc...
Logging onto our computer system, I learn that we have already traded more than a million shares electronically and are ahead $400,000 in the first hour of trading
Derek Chevalier said:
SitCet said:
Flash Boys book probably worth reading. The answer to your question is complicated... deliberately.
And maybe thishttps://www.bankers-anonymous.com/book/book-review...
https://www.amazon.co.uk/Flash-Boys-Insiders-Persp...
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