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Stock Market algorythm

Does anyone know where I can find information about the kinds of algorythms used to determine current prices on the stock market?

For example, the more people that want to buy a stock, the higher the price goes. But how does the algorythm work that determines how high the prices goes? Why does the stock rise to $1 instead of $1.10?

I'm working on a game that will have a market-like component. As players buy weapons, the price of the weapons will increase for other players and likewise if lots of players sell off, then the price needs to drop. I have a few ideas, but I'd really like to model it after a real market as much as possible?

Thanks

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smidgie82

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moorhouselondon

The best information you can get is (I think they call it) Level 2 information - which is the details of (1) the Price that a Seller has posted that he is prepared to sell for (2) the price that a Buyer of the shares buys them for. This is factual information because this is the value that the Shares changed hands for. The price you often see advertised is what the Seller would *like* to sell the Shares for, which could be artificially high.

Several companies offer this information, but you need a means to interpret it to produce an investment strategy.

moorhouselondon

http://www.advfn.com/

gives details on Level 2 data

moorhouselondon

http://www.advfn.com/help/pricing-information-61.html
http://www.advfn.com/help/what-does-the-seaq-aim-window-show-59.html

spuerman

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so are you saying that there are literally people that just sit around & bid on what they are willing to pay for each stock out there & that the current price is based on that? I had assumed there was some kind of algorythm so that everytime someone bought a stock, it would effectively raise the price while selling the stock would lower it.

smidgie82

Nope. It's a free market system. Prices are based on a compromise between what the owner wants to get and what the buyer wants to pay. There are economic issues that make stocks more desirable to have (dividends paid by the company, annual growth percentage, stability, etc.), but ultimately, a share is only worth as much as you can get someone to pay for it.

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moorhouselondon

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Brian Mulder

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