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Google is secretive about its search algorithm to prevent people from gaming the system; wondering if the major stock exchanges do something similar... Can any
by joelhaus 16y ago
Google is secretive about its search algorithm to prevent people from gaming the system; wondering if the major stock exchanges do something similar...
Can anyone explain (and possibly cite sources) what the price represents that is displayed when you obtain a stock quote directly from one of the major exchanges?
Is it:
A) The highest unfilled bid
B) The lowest unfilled ask
C) The most recent filled trade
D) The most recent trade at some min. % of float
E) Some combination of the above
F) Other: _______________________
This is a teachable moment and would go a long way towards helping us understand what happened. On the surface, most of these pricing models seem incredibly easy to game.
Bonus; are other quote sources priced using alternative methods? If so, please explain.
- ewjordan 16y agoYou should be able to get any of this information - a good broker will always show you a), b), and c), and using tick-by-tick data in most markets you can figure out d). Not so much secrecy; however, that doesn't mean there aren't errors, and it now sounds like today there were a few coming through NASDAQ re: Proctor and Gamble, which made the brief decline appear a lot more catastrophic than it actually was.
- joelhaus 16y agoThanks, I understand that this information is available, but I wonder what the quoted price reflects when you go to Yahoo Finance, et. al.. I've asked this to my finance professor and professionals; there seems to be little/no consensus on it. There must be arbitrage opportunities here... maybe that is what HFT are doing? According to the NYSE, this was purely the result of an economic supply-demand mismatch. I think the result of this, is the realization that the quoted price can be a poor (exploitable) indication of an equity's value at any given moment.