Share is considered the most liquid asset that can be converted into cash easily. It is a general trend that when the prices of shares decrease, the shares are bought and when they increase the share is sold. A natural question that arises into our mind is how we can calculate the price of a share at any time? The answer of this question will be quite clear too. The people who play in share market can easily understand that the price calculation is a totally automated and software based system in which prices are being matched electronically. The offers and bids are matched and then prices are calculated.
When a person has urge to buy a share and he places an order to buy that certain shares at that certain price then this would call his bid and when a person places an order in a share market to sell his shares at some specific or particular price then it will be known his ask. ELOB or electronic limit order book is a book that possesses all the bids and it matches asks with the bids provided. The matched bids and asks pave the way for executing an order. The final price at which the transaction gets executed that particular price is considered as the Last Traded Price that is commonly known as LTP.
Exchange is a place where the transactions of buying and selling of stock and shares take place. This is a place where buyer and seller both put their best possible bids and ask and then they come to some executed transactions. This is a place that provides the opportunity to make money in the share market. Actually, the key role of exchange is to provide the best possible price at that time available in the market whether you are buyer or a seller. But in a case you have placed the limit orders then these orders will not be executed until and unless someone in the market truly matches these orders. If on the other side of the transaction someone will agree then it will get executed.
The people who understand the terms and conditions of share market they play in share market and get the best suitable prices for them. When we talk about the things at the higher level, we cannot ignore the stocks because it has its importance too. When the bids and ask for the stock are being tried to agree upon then the stock price comes forward and dealings regarding the stocks are also being finalized after matching the asks and suitable bids. When they match then the deal gets executed. It is also for sure that the prices of the stocks in the market are also determined based on the volume of the stock.
It shows that there are some great intricacies involved in the stock exchange business but it is not doable to mention all of them. All people need to know about is that how they can make money in the share market?