What is a price?

The last agreement

Five agreements, one after another, each a dot at the number two people settled on. Only the last one, circled, is the price right now.

A share has no price written on it. Nobody at the business sets one, and nobody at the market does either. A price is simply the number at which one person most recently agreed to sell a share and another agreed to buy it.

The screen shows that last agreement. It is a record of what just happened, not a ruling on what the share is worth. Someone may think it is worth double and someone else half; they just have not met at a number yet.

Between agreements, nothing is fixed. There is the last price, and there are people waiting with numbers they would accept. The moment two of them meet, there is a new last price, and the screen changes.

That is why a price can move while nothing about the business has changed at all. It moves whenever the next buyer and the next seller settle somewhere different from the last two.

Said with a food truck

You still own two slips of your friend’s food truck. A neighbour asks to buy one. She offers sixty dollars, you ask for seventy, and you shake on sixty-five. For now, a slip of the food truck costs sixty-five dollars, because that is the last number two people agreed on.

An hour later another owner, short on rent, lets a slip go for fifty-eight. Now the price of a slip is fifty-eight. Your slip did not change, the truck did not change, and the tacos taste the same. Two other people simply met at a different number.

That is step two. The next chapter asks why the next handshake lands higher or lower than the last one.

Nothing here is advice. The whole ladder is on one page; the app behind it is free to start - the door opens to any address. Education only. Pumpstradamus is a paper trading app: no real money is traded, and we are not a broker or an adviser.