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>>qqqqqu+(OP)
If I buy a stock, does the price at which I agreed to buy it become the new share price on the stock exchange?

Every article on "Where do stock prices come from?" seems to just talk at a high level about supply and demand.

But where does the price come from at a nitty-gritty level? Is it an average of all existing offers or something?

Do different exchanges and stock-ticker websites have different formula for calculating share price?

If a very low-volume stock is listed at $4, and then I offer to buy a share for $100, does the NYSE suddenly start listing its price at $100?

>>robert+XO
If you see a single share price listed, that is the price of the last sale that occurred.

Now that can either mean that someone bought a share that someone else was selling or that someone was selling a share to someone who was offering to buy.

The shares are listed as a series of buy and sell orders in what's called an order book.

If the price a share was sold at was 100$ and you think it will go a bit lower, you could place a buy order at 90$. Should enough people sell shares to reach your price and order, your order will be filled and you will own the share at 90$.

If someone wants a million shares at 91$, you may not get your single share at 90$.

To go back to your example, if you were to place a buy order at 100$ for a 4$ priced share, how much the price moves depends on how many sell orders are in place from 4$ to 100$ and how much you are buying.

If it's only one for share, your order will probably get filled at something like 4.01$ if the spread is low (the spread being the difference between the highest buy order and the lowest sell order).

If you're buying 1000 shares and it's a low volume stock with a "thin" order book, maybe it could go up a few dollars instead but for it to go up to 100$ you have to buy every single share between 4$ and 100$.

>>alasan+BQ
What happens if the stock sees almost no volume of trades, and we have a situation where the lowest sell is at $90 and highest buy at $100 (i.e. both parties are overgenerous)? Does the stock exchange make them split the difference, i.e. makes the trade at $95?

>>badpun+na1
If someone wants to buy at $100 and someone else wants to sell at $90 it depends on who came first. To really answer this question, you need to understand the difference between market maker and taker and you need to understand how the limit order book [1] works.

Assume there are no other orders in the order book.

Scenario 1: Seller submits a limit sell order for $90. Since there are no buyers, this order goes into the book. Then a buyer submits a limit buy order for $100. The order would be filled at $90 (the best ask) and the buyer only pays $90. Here, the seller is the maker and the buyer is the taker.

Scenario 2: Buyer submits a limit buy order for $100. Since there are no sellers, this order goes into the book. Then a seller submits a limit sell order for $90. The order will be filled at $100 (the best bid) and the seller gets $100. Here, the buyer is the maker and the seller is the taker.

Market makers are responsible for setting prices and providing liquidity. If you want to understand this in more detail, check out this post [1] I wrote up a while ago.

[1] https://www.tradientblog.com/2020/03/understanding-the-limit...