Flash Price

What Is a Flash Price?

The flash price gives as close to real-time price data as could be expected, with the comprehension that there are dependably lags between price quotes and the genuine traded price.

How a Flash Price Works

Flash prices appeared with the approach of computerized stock trading during the mid-1990s. Computer calculations and online investing sites were important in the [day trading](/informal investor) boom that reshaped stock investing toward the finish of the 20th century. Before these progressive changes, stock traders placed trades via telephone with a stock broker, and the lag times in pricing were far greater than those made conceivable by the coming of computerized trading.

The new computerized trading platforms permitted a bigger number of individuals than beforehand conceivable to take part in the stock market. Related to online trading came the availability of sophisticated charting and analysis apparatuses. The internet opened up another world of online trading to such an extent that a lot more investors could partake, which implied higher volumes to be traded. Prior to 1996, stock prices displayed on the stock ticker lagged 15 to 20 minutes behind the real transaction. Real-time tickers were presented in 1996 and assumed a key part in the increased fame of day trading.

Tracking the increased volumes turned into a continuous innovative test. The quick transactions made the requirement for computers to begin prioritizing by means of algorithms which prices to display all the more conspicuously over others. The key factors for prioritization were curiously high volumes, sensational price swings, and recent insight about note. Incidentally, the computerized prioritization rules feed into the increased visibility of a stock.

For instance, raising certain stocks to the real-time flash price ticker tape causes more immediate to notice that stock, with the possibility of increased volatility.

The Flash Price and Flash Crashes

During the mid 2000s, technical stock analysts and software designers combined efforts in seeking another competitive advantage in view of [high-speed trading](/high-recurrence trading). This new fast computer-based trading capacity permitted trades to be made more rapidly than conceivable by the numerous different investors lacking real-time data. Rather than depending on human technical analysis, machine-based analysis came to the cutting edge.

One consequence of this new high-speed trading capacity was the flash crash of May 6, 2010, when a fast selloff in securities occurred in no time. The Dow Jones Industrial Average lost in excess of 1,000 points in a short period of time.

A flash crash occurs so rapidly it can overpower the circuits at major stock exchanges like the NYSE. Trading is stopped while buy and sell orders are matched up in a more orderly manner before trading resumes. These framework wide computerized flash crashes can cause far reaching investor panic, as found in the flash freeze of August 22, 2013, which ended trading for three hours.

Highlights

• Flash prices are refreshed quickly for those with access to flash quotes.
• The flash price gives as close to real-time price data as could be expected, yet investors must realize that lags between price quotes and the genuine traded price generally exist.