I read on some books that this is determined by supply and demand. and On some other who give concrete example that if there is only 2 traders one with a ask of let's say $25 and the other with bid of 23$ for a securities at $24, there is no trade and the price doesn't move. Then an other investor place a buy order market and then he buys at $25 and the price move to $25.
But this is two different principle. I can imagine a lot of sell order in the book for a few buy order. Following the supply demande principle the price should fall. But following the second principle if the sell market orders are fulfilled at a higher buy price, the price should go up.
Does someone have a clear explanation of the mechanics that makes price move up and down ? I don't think there is an algorithm also cause at the time of no computer when people traded on the Pit how the price was recorded I have no idea, and who determined the price ??
Submitted March 28, 2014 at 11:32AM by FtYoU http://ift.tt/1gJT44C
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