There are several factors that influence stock prices. The price of a stock always fluctuates because it is based on the laws of supply and demand.

Stock quotes have a bid and ask price at all times. The bid price is the price at which buyers are willing to buy. The sale price is the price at which sellers are willing to sell their shares. If the bid and ask prices match, a trade is executed. The praxis is still somewhat more complicated than the theory.

In general, there is always a difference between the offer and the sale price. The spread always changes along with the stock price, it can be widened or narrowed based on the volume of the stock and market action. You can buy at the offer price, but only sell at the lower offer price.

In the stock market, a market maker or specialist is responsible for providing a current bid and ask at all times. His role is not just to act as an intermediary between buyers and sellers, but more importantly to provide a market at all times. That means he must display a bid and ask price at all times when he is willing to buy and sell. If there are no other buyers and you are the only one wanting to sell, for example, then the market maker will buy from you at the price and volume that he has shown.

For this work, the market maker earns the spread. He has a high risk because he must buy and sell even if he does not find anyone to pass the shares to. That is why the margin widens when stocks are moving fast or when there is little volume. In certain circumstances, the spread can even be several dollars, but typically the spread is a few cents only on very liquid stocks.

On the New York Stock Exchange (NYSE), the price is determined by a so-called specialist in an “open clamor” system. The specialist handles all orders for a particular stock and must match orders to the highest volume. Many believe that there is no spread on the New York Stock Exchange because they cannot see it, but of course there is. The fee you pay for each transaction goes to the broker and not to the specialist. He wins the spread.

On the NASDAQ, for example, these specialists are called market makers. Different manufacturers of markers compete, so there are different offers and demands at all times. In addition, there are many different Electronic Communication Networks (ECNs) that post bids and asks from private and institutional traders at all times. These networks match offers and requests 100% automatically and electronically. These networks make their living by charging an ECN fee per transaction or per share.