In finance, the terms stock price and share price are interchangeably used and mean the same thing.
A stock price represents a share of a company in the US, while the share price is more commonly used in the UK, Australia, and other parts of the world.
There are two types of stock prices: bid price and ask price. The bid price is the highest amount that an investor is willing to pay for a particular stock, while the asking price is the lowest amount that a seller is willing to accept for that same stock. The difference between these two prices is known as the spread.
Pricing equities involves a wealth of additional terms, including the open, high, low, close, ask, bid, and spread.
So what does it all mean?
What is a Stock Price?
A Stock Price is the quoted cost of a portion of equity or a single stock in a publicly listed company. Each stock is a share of ownership in a company; this is why Stocks are also called Shares. The last executed trade between the seller and buyer of the specific stock determines the movement in stock prices.
Stock Price vs. Share Price
Fundamentally, there is no difference between the terms “Stock Price” and “Share Price.” The term “stock price” is used in the USA and Canada, while the term “Share Price” is used in the UK, India, and Europe. They are both fully interchangeable and mean the same thing: the price of a given portion of the equity in a publicly listed company.
US Stock Prices
US stock prices represent the current value of a company’s shares in the market, and they are quoted to investors in dollars or USD. They are influenced by various factors, including a company’s financial performance, economic conditions, and investor sentiment. Understanding US stock prices is crucial for investors as it can help them make informed decisions about buying or selling stocks.
Table: Stock Price Quotes for Microsoft Corp.
| Microsoft Corporation (MSFT) | $ |
|
Previous Close
|
312.14 |
| Open | 312.3 |
| Bid | 311.08 x 1100 |
| Ask | 310.99 x 800 |
| Day’s Range | 310.18 – 313.70 |
| 52 Week Range | 213.43 – 366.78 |
| Volume | 7,039,431 |
|
Market Cap
|
2.315T |
| Beta (5Y Monthly) | 0.9 |
| PE Ratio (TTM) | 32.19 |
| EPS (TTM) | 9.68 |
| Earnings Date | Oct 23, 2023 – Oct 27, 2023 |
| Forward Dividend & Yield | 3.00 (0.96%) |
| Ex-Dividend Date | Nov 15, 2023 |
| 1y Target Est | 369.29 |
View Microsoft Quotes Live in TradingView
Example: US Chart for Microsoft Corp in USD
View the Microsoft Chart Live in TradingView
UK Share Prices
On the London Stock Exchange (LSE), stock quotes are in UK pence, also known as GBX (Penny Sterling). If you want to buy or sell a stock on the LSE, you must know how to read and convert from a quote in Pence into your native currency or multiply the GBX by 100 to get the share price in GBP or British Pounds.
For example, if a share is quoted at 8,296 GBX, the stock is trading at 8,296 pence or £82.96.
It’s important to note that even though the LSE quotes in GBX/Pence, some international brokers quote the UK stocks in $US Dollars on their platforms. So, you may not always see a stock price listed in Pence if you’re using an international broker.
Table: Share Price Quotes for the London Stock Exchange Group UK
| London Stock Exchange Group (LSEG.L) | Pence |
| Previous Close | 8,296.00 |
| Open | 8,300.00 |
| Bid | 8,260.00 |
| Ask | 8,262.00 |
| Day’s Range | 8,244.00 – 8,316.00 |
| 52 Week Range | 7,052.00 – 8,893.86 |
| Volume | 131,509 |
| Avg. Volume | 1,491,368 |
| Market Cap | 44.83B |
| Beta (5Y Monthly) | 0.37 |
| PE Ratio (TTM) | 68.83 |
| EPS (TTM) | 1.2 |
| Earnings Date | Aug 03, 2023 |
| Forward Dividend & Yield | 1.11 (1.34%) |
| Ex-Dividend Date | Aug 17, 2023 |
| 1y Target Est | 9,750.40 |
Get UK Share Quotes on TradingView
Example: UK Chart for the London Stock Exchange Group in GBX
See this UK Stock Chart on TradingView
Stock/Share Price Terminology
Trade Time
The “Trade Time” is the time of day when the last share or stock was traded in the publicly listed company. Trade time can be useful in spotting a stock that is very thinly traded, meaning it has a lack of liquidity or buyers and sellers. It would be best to avoid shares with low liquidity because you might have difficulty selling the stock because of a lack of buyers.
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Percent Change
In stock market terminology, the Percent Change or % Change is the difference between the previous trading day’s closing price and the current price (Last Price). The Percent Change indicates the increase or decrease in the Stock Price since the previous trading day.
Previous Close (Prev Close)
The Previous Close is the selling price of a particular share on the last transaction of the previous day’s trading. This is the final “Last Price” of the previous day’s trading.
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Open Price
The Open Price is the price at which the first share was traded for the current trading day. Due to market volatility, the Open Price can significantly differ from the previous day’s close.
Bid Price
The Bid Price is the price a buyer bids to buy a stock. The Bid Price is the current market price offered for the stock. A stock exchange is like an auction, with an Asking Price and a Bidding Price. So, if you were to sell the stock now, you would get the price you asked as long as the bidder is willing to pay it. The easy way to remember this is “BID TO GET RID.” The BID is the price you would get when you want to get RID of the stock.
Ask Price
The Ask or Asking Price is the opposite side of the trade to the Bid Price. If you want to buy stock, this is the price that someone else is ASKING for it. The ask is the current price you will pay to buy each stock. An easy way to remember this is “ASK TO BUY.”
Last Price
If a stock is currently trading, meaning the exchange on which it is being traded is open, you will see the Last Price. This is the price at which the stock last changed hands from seller to buyer. So, if the seller asked for $2.50 for one share and the trade was executed, the last price would be $2.50. The Last Price changes with every executed trade.
Stock Price Spread
In the case of Netflix on the Nasdaq Stock Exchange, many shares are traded daily. So, the exchange handling the transaction between the buyers and the sellers has no problem finding matching partners for each transaction. When a stock is traded a lot, it means it is very liquid or has a lot of liquidity.
A very liquid stock generally means a low BID/ASK Spread. When a stock is rarely traded, and the buyers and sellers cannot agree on a price to make a trade, the spreads tend to be larger.
Where does this difference in the BID and ASK price go? The spread is usually the fee for the market maker, broker, or specialist handling the transaction. This is not the same as the stock broker’s fee, which you will pay per trade to your broker.
Bid/Ask Spreads
Stocks with a large spread can be a problem. It tells you two important things:
- The stock might not be very liquid; therefore, it may be harder to sell at the price or time you wish to.
- Suppose you buy a stock with a large spread, for example, over 2% of the stock price. This means you would need to make a profit of 2% on the stock to break even.
So be careful about the spread.
Days Range
The Day’s Range is the price range within which the stock price moved up or down for the current trading day. For example, if Amazon had the highest sell price of $2,200 for the day and the lowest sell price of $2,000, the day’s range would be 10%.
52 Week Range
The 52-week range is the value between which the stock price has moved over the last 52 weeks of trading. This is not the last calendar year but the previous 52 weeks from today. Investors assume that if a stock is close to its 52-week high, it is overbought; conversely, if close to the 52-week low, it might be undervalued.
Volume
Volume is the actual count of shares/stocks traded in a given timeframe. The volume on a daily chart represents the number of stocks that change hand that day. High volume and a decrease in stock price is a bearish signal in stock analysis. According to analysts and supply and demand theory, high volume and an increase in stock price are bullish.
Previous Close
The previous close is the closing price of a stock on the trading day before today’s open. This metric helps investors determine how the stock has moved overnight or during after-hours trading before the market opens for the current day. If there is a significant gap between yesterday’s close and today’s open, this could indicate news that has caused traders to act in a certain way.
Market Capitalization
The market capitalization or market cap is the stock’s last price multiplied by the number of outstanding shares. For example, if my company has 1 million shares, and the stock’s closing price yesterday was $10, my business’s value (market capitalization) is $10 Million.
PE Ratio
The PE ratio is calculated by dividing the price per share by the actual last reported earnings per share. This is a very important measure of the relative pricing of a firm. Read more on the P/E Ratio here.
Current Yield
The current yield is the Dividend per share divided by the number of shares. So, if you have one share worth $10 and the company pays a dividend per share of $1, you will have a dividend yield of 10%.
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Why do Stock Prices Change?
Stock prices change due to supply and demand pressures from the market participants according to the following rules:
- If Supply is equal to Demand – Stock Prices Remain the Same.
- If Supply is greater than Demand – Stock Price Drops.
- If Demand is greater than Supply – Stock Price Increases.
Example: Why Stock Prices Change
Imagine you live in the Caribbean and own a Pineapple stand at the local market. During harvesting season, you have lots of pineapples to sell; you have more than people need. This means the supply of pineapples is higher than the demand. So, to sell all the pineapples and maximize your gross profit, you will reduce your prices to encourage people to buy more.
When the pineapple season is over, people still want pineapples, but you have less to sell.
You still want to make a good profit, so you increase your pineapple price (Asking Price). Because more people want pineapples and fewer pineapples are available, the price will naturally rise as people wid higher (Bid Price). This means there is more demand than supply.
Summary
So what is in a stock price? Quite a lot. Remember three things:
- BID to get RID (the price you will get when you sell a stock)
- ASK to BUY (the price you will pay when you buy a stock)
- Beware of large stock price spreads, as this can mean that no liquid market has enough buyers and sellers.
- The Price Earnings Ratio helps you judge the relative value of a stock compared to its peers in the same industry.
- The spread is the difference between the bid and ask; it is often what the market maker or market-making system earns to facilitate the trade.
- Stock Prices move because the equilibrium between demand and supply (buying and selling) is unbalanced.
FAQ
What is the best software for stock/share prices?
The best software for stock/share prices is TradingView. It offers a wide range of indicators, chart drawing tools, and real-time streaming of price quotes in all currencies. Its intuitive user interface is easy to use, even for novice traders.
What is a stock price?
A stock price is the cost of purchasing a share in a particular company. It's determined by supply and demand dynamics in the stock market.
How are stock prices calculated?
Stock prices aren't calculated but are determined by supply and demand market forces. If more people want to buy a stock, its price rises.
What is the difference between bid and ask prices?
The bid price is the highest amount a buyer is willing to pay for a stock, while the asking price is the lowest price a seller is willing to accept.
What does a stock quote mean?
A stock quote provides information about a stock's trading activity, including its current price, volume, and daily high or low prices.
How do I read a stock quote?
A stock quote consists of several components. The price is the most prominent number, and it is usually followed by information about the volume or total number of shares traded in a day, as well as its daily high or low prices. The acronym "Bid/Ask" indicates the highest buy offer (bid) and lowest sell offer (ask).
Why do stock prices fluctuate?
Stock prices fluctuate due to changes in supply and demand, driven by factors such as company earnings reports, economic indicators, and market sentiment.
What is a stock’s market cap?
A stock's market cap is the total market value of a company's outstanding shares of stock. It's calculated by multiplying the share price by the number of outstanding shares.
What is a stock split?
A stock split increases the number of shares in a company, reducing the share price but not changing the company's overall market value.
What is a stock index?
A stock index is a measurement of a section of the stock market. It's computed from the prices of selected stocks and used as a benchmark for portfolio performance.
What is a penny stock?
Penny stocks are typically low-priced, small-cap stocks, often trading for less than $5 per share.
What does EPS mean?
EPS stands for Earnings Per Share. It's a portion of a company's profit allocated to each outstanding share of common stock.
What is the P/E ratio?
The P/E ratio (price-to-earnings ratio) is a valuation ratio of a company's current share price compared to its per-share earnings.
Why Do Stock Prices Go Down?
Stock prices decrease because the people who want to buy a share of that company believe that the company is worth less than the current price. If the number of people who believe the company is worth less than the current price (Demand) outweighs those who believe it is worth more (Supply), the stock price will drop. If supply is greater than demand, the stock price drops.
What determines a stock price in the short term?
A stock's price is determined by what it sells for on any given trading day. This means when a sale is completed, that is the LAST PRICE the stock was sold for.
What determines a stock price in the long term?
The determinant of a stock price's movement over the long term is how well the company performs. The stock price will rise if a company increases profits, pays dividends, or has a stellar future (and the market participants believe it).
What is a good volume for stocks?
A good minimum volume for a stock is typically 1 million stocks traded on a given day on average. Good volume means good liquidity, meaning there is enough money to keep the bid-ask spreads tight. This means you can usually sell for the price you want at the time you want. If there is low trading volume and many gaps in stock price bars, this is a low-volume warning sign.
What Does it Mean if a Stock is Liquid?
If a stock is liquid, there is plenty of money lubricating the trading of the stock. For example, if many people exchange the stock daily and money flows in and out of the stock, it is deemed highly liquid. This means a low bid/ask spread and better trading conditions, as you can easily liquidate your stocks when needed.
What is a good 52-week range?
There is no good 52-week range. Some traders seek to buy stocks at the bottom of the 52-week range, expecting it to go higher. Other traders buy at the height of the 52-week range, expecting a stock price breakout to new highs. A good 52-week range depends on your personal trading or investing style and strategy.
Why Do Stock Prices Go Up?
Stock prices increase because the people who want to buy a share of that company believe that the company is worth more than the current price. If the number of people who believe the company is worth more than the current price (Demand) outweighs those who believe it is worth less (Supply), the stock price will rise.
Hi Barry, my husband is looking at investing in cryptocurrency (cardano) and I want to ask if the price currently at 1.020 (gbp) is 1p or is this different being a USA company?
Thanks
I believe this is all in USD
Hi Barry, I am interested to learn more about the paid courses…however I just dont want to waste money with things I already know.. so can you personally show me or tell me, something I would not know? Something advanced like yourself would use or knowledged in? This will prove that it worth taking the paid courses.
Hi Sully, how about this extract from the book “Economists generally argue that stock price movement is essentially random and that when you trade stocks you are simply gambling. They state that the history of price has no bearing on the future stock price. However, we know randomness does exist but only in the short term (minutes to days time-frame). ”
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thanks for the great question.
Barry
So if aUK share price is 0.125 how much is that in pence if it’s less than a penny??
Hi Julie, it is 0.125 pence.
This is a great thread for myself as a beginner running an isa account and looking over the FTSE 100 currently !
Thank you for your general basic knowledge , are the video tutorials amongst other formats of tuition here free ?
thanks Chris, I am glad you liked it
Yes we have a free training course here. https://www.liberatedstocktrader.com/free-stock-market-training/
Hi Barry my late father owned euro tunnel shares. I know my father invested in many thousands of pounds when they were launched as he had a theory that because to government were involved in this venture they would not go bust. How wrong his prediction was as I enquired over the number of shares he had and their value, I was schojed to learn that hadbchanged hand and name. They were now worth nothing more then few pounds in total. Can you advise me whether they are worth cashing in or what I can do next if anything. Thanks Raz
Hi Razia, I think this article answers your question https://www.telegraph.co.uk/money/jessica-investigates/have-eurotunnel-shares-gone/
Firstly, I am not a trader, however can you clear a question I have, Around two years ago I bought some penny shares for a future chance investment for each of my Grandchildren. (years to go yet) They were at the time around 2p each and were called Renueron (Rene) I have not looked at them or had an interest myself until I heard their name mentioned in a recent activity. Now comes my problem, when I checked these shares they are now marked at 235.00, this is deceiving, surely they are not £2.30 or even 23.5pence. I am assuming that the decimal point is after the 2, am I correct ? If so, then future investors learning, have a muddy field to negotiate. or is there another explanation ? Thanks IVOR
Hi Ivor, as mentioned in the article, in the UK 235 will mean 235 pennies or 2.35 GBP. Seems you got lucky
Barry
but if the bid price is the price any share owner will get if he wants to sell, then how does this figure change?
HI Neil, good question, there will be multiple bids for a specific stock, and it is normal that the bids are at different prices. It is in the interest of the seller to take the best price for their stock. This select of the best bid and ask prices are what moves the stock price for the next bid and offer.
thanks
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When you are starting out in the stock market,
it is best to invest in what you know. The more familiar you are with a particular business or market niche, the better you will be at knowing
whether a certain investment is likely to pay off.
As you learn more, you can expand your investments.
Hi Barry, thats absolutely great, it is much appreciated. I must say, a lot of my doubts are clarified now. Once again thanks.
Barry, any ides, how many shares a company can publish as a public issue…?
Thank you for sharing the information. Why the open price is difference from previous close price? In what condition this will happen?
Thank you,
Mitzi
Hi Mitzi,
the reason for the price difference between open and close, is that people trade in after hours markets. This affects price out of the normal market hours. Then when the market opens, it opens near the out of hours last traded prices.
Great question thanks
Hi de murph, stop loss orders are usually filled when the stock price moves through the value you have specified.
how to fill stoploss orders
Really Gr8 ! Thanks For sharing..