Why does the price move? The answer is here!!! - page 7
You are missing trading opportunities:
- Free trading apps
- Over 8,000 signals for copying
- Economic news for exploring financial markets
Registration
Log in
You agree to website policy and terms of use
If you do not have an account, please register
I already have the feeling that as many people as there are opinions!
I raised a question and I got scared of this confusion. Isn't there a simple and clear scheme of work?
We urgently need to create an introductory course for programmers. Otherwise they all write and write, but I don't understand what they're saying...
Tell me how you understand your question.
You have to know half the answer to ask a good question...
Yes, gentlemen, how messed up everything is...
Forex exists for real export/import companies. Calling someone like BHP a "poor customer with no choice" is amusing... Also, the story of stale currency that is sold at an inflated price is purely a "horror of our town", it has nothing to do with forex.
Any buy/sell order will be executed by a broker/bank from their own reserves and then/at the same time they will find someone who wants to make a reverse operation. The bank's risk that the price will go away, i.e. there are no willing sellers/buyers at the right price, is covered by the spread. Since the market is highly liquid, the risk is minimal and so is the spread. On the news, the risk that the bank will not be able to cover a reverse trade increases, so the spread is widened by the bank.
When someone makes a purchase request, the bank checks whether it can buy enough of the respective currency and at what price. If the request is big, then it is obvious that the bank has to buy everything that is available on the market at the current price, and then also at a price 1-2-3 points higher. The bank calculates how much it will cost, adds its commission (spread) and gives the client the price. Naturally, it will be higher than the current price on the market and the terminals of all brokers who receive information from this bank and then all those who are under these brokers will show the price increase.
The importance of speculators in the forex market is great, but still not enough to smooth the prices due to the size of the market. Only the central banks of the leading countries are able to influence the market. It is ridiculous to discuss the influence of "kitchen" traders on the market...
what exactly is it that GAZPROM needs to sell gas! and get foreign exchange ...
Don't importers and exporters drive the market?
SK describes the example of a $100 note figuratively, meaning large producers do the same...
to sell something abroad! (for example, a trillion cubic meters of gas) and get a mountain of euros!
but you have to buy a couple of big ships in the UK for pounds!
i understand that there are different financial schemes, but the conversion is still there!
hence the euro is sold and the pound is bought - here is a candle in the forex!
please don't take it literally! i was just figuratively speaking!
I think kitchen traders do not work in the market at all! They play among themselves and leave most of it in the kitchen!
If someone really works, it's the one who works through the bank ... We also know that the bank does not care if a trader loses money or earns money.
they do not incur losses unlike the kitchen! the kitchen has direct profit from losses!
If you argue that it is not a loss :-) If only with reason ...
Of course the market is not driven by small speculators
but the central banks and well it's a union of big banks with the cute name of CCs
well the exporters the importers are big... ... at least they can light a candle!
p.s.
p.s. A trader can consider himself a success if he gets 5% of his deposit and starts a 100 pips candle!
( I hope everybody will take it as a joke :-)) )
The main purpose of the market is for the seller to be able to sell and the buyer to be able to buy at any time. Not only could he, but he could buy/sell. The market goes where the maximum volume will be traded. A machine to maximise liquidity. Speculators, Market Makers do just that - increase liquidity by moving markets to areas of maximum liquidity. Only the former at their own risk, while the latter have a constant reward, although there are risks too. They have the dual objective of providing maximum liquidity while minimising their own risks. So it is no surprise that the market is walking on stops, for example. There is a high concentration of orders and large volumes of trades. If for MM the liquidity maximization is a question of increasing the commission, for a speculator it is a possibility to take part in the drive caused by getting into these zones.
At the same time the market moves in such a way as to balance the profit of some people with the loss or shortage of profit of the others. The speculator's profit does not come from outside - someone has to lose this amount, or has to pay more for the product than some time ago, which also can be considered a loss or at least a lost profit (which is the same thing). This is one of the tasks of TA - to understand that someone is about to be screwed and to take part in it, minimizing the risks and losses to find themselves in this position :) Because deals made by a pack of speculators waiting for profits become potential prey for others. As in nature - a lot of predators gobbling up each other and big FEA corporations as plankton and life source (for FX).
I already get the feeling that as many people as there are opinions!
I even got scared of such a mess. Isn't there a simple and clear scheme of work?
We urgently need to create an introductory course for programmers. Otherwise they all write and write, but I don't understand what they're saying...
We urgently need to create a literacy course for programmers. They all write, they all write, I don't understand what they're saying...
Not only programmers, but traders do not need this course. To make a profit in the market, you do not need to know the mechanism of price movements of 1p. You (or at least not all drivers) do not know all the intricacies of a modern car, but this does not prevent you from driving it successfully.
And even more interesting why there is no (or very little or hidden) information on it!
I've searched a lot myself, but I haven't found a specific answer either, and I haven't even heard of an example in numbers!
Having read the forum, one can conclude that few people have seriously considered "who sets the price". And yet many opinions are even contradictory.
I thought that since there is no authoritative answer, we may find an approximate answer by comparing facts and following the method of eliminating contradictions.
In order to understand how the price is converted into a number, I think it is necessary and sufficient to know
1) who sets the price, i.e. who is the source of price (further - IC).
the answer to those who say that "no one sets the price - it adjusts to the market" or "it is all about demand and supply".
or "it's all about supply and demand"
All these words are very vague, they do not give anything to the programmer who writes the algorithm.
You cannot say to a computer: "Well, brother, you understand supply and demand, there is nothing complicated about it. Give me some money."
Therefore, in my case, CI is not an abstraction like the word "market", but a specific computer ("server") which performs the operation of dividing volumes and gets a price which everyone then uses (more on this below)
2) how does the price from CI reach our terminals (because in the process of price transmission from CI to dealer centres it may change, because the DC themselves adjust it to their own needs)
I was looking for an answer by collating the facts and answering exactly these two questions!!!
Here are my observations:
1) all prices are determined and distributed in electronic format
From this fact we can conclude that FOREX is
1) a closed system (i.e. all money exchange operations not registered in this system cannot physically affect the number (price), they can only affect the system participants).
For ease of understanding, let this be in one building.
2) In this system, everything goes through their servers, i.e. all participants must be electronically registered in the system.
The way I see it, all direct participants have electronic wallets in this system.
I.e. a bank comes to this Forex organisation, hands over its suitcases of paper money and it is credited with an electronic wallet in this system.
3) Then there is an exchange of electronic marks, and the price is set by the participants themselves.
The participants make the bids: the server obtains the following table
bids in the direction of dollars -> rubles
1) Peter's application | have 2 quid - want 10 rubles -> the rate of 1 quid is 5 rubles
2) Vanya's request | have 2 quid - want 11 rubles -> rate 1 quid is (11/2) rub
3) Tanya's request | have 3 quid - want 20 rubles -> rate 1 quid is (20/3) rubles
requests in rubles -> quid
1) Igor's order - have 8 rubles - want 2 quid -> rate 1 quid is 4 rubles
2) Sasha's request has 6 rubles - I want 2 quid -> rate 1 quid is 3 rubles
4) Let's take the orders in the direction of quid -> RUB. If I have 10 rubles, I can exchange them into 2 quid (I make a deal with Petya) or into 1.8 quid (I make a deal with Vanya), etc. In this group I buy quid for rubles, i.e. I receive a price to buy quid for rubles from this group.
In this group we have 3 orders and 3 prices. What price should I take? I think we should take the average price.
The price is determined not by the currently submitted requests but by the requests which have already been executed!!!!.
To do this, the server calculates how many dollars were sold and for how much.
For example, let's say 3 of our bids filled, then the total sold 2 +2 +3 = 7 quid for 10 +11 +20 = 31 rubles.
hence, the rate (or price or number or ratio) will be 1 quid is worth (31/7) RUB, i.e., 1 quid = 4.4285714285714285714285714285714 RUB.
i.e. we got the average price at which transactions were made in a certain period.
I think this is the price that FOREX sends to the brokerage companies, and the brokerage companies after correction send it to our terminals!
Or the brokerage companies that take part in this electronic system determine the price, i.e. they know and can take the price from Peter or Vanya or Tanya or calculate the volume ratio themselves or whatever!
I think that the scheme works like this:
1) Let me be a trader and I have a ruble deposit (6 rubles) in my DC account. BC has its own e-wallet in FOREX system.
2) Let DC send me to my terminal the price of USD/RUR instrument.
3) My deposit has roubles and I want to buy quid (I want 1 quid), i.e. I need the price to buy quid, i.e. my direction is roubles -> quid
4) Petya's order has the opposite direction to my order, i.e. he has quid -> rub.
5) RC takes the price from Petya (because he has the best price) and sends it to my terminal. 1 quid = 5 roubles. I agree and buy. The DC makes a transaction with Petya!
This scheme is slightly different from the one we trade on (i.e. if I wanted to buy 3 quid, i.e. Petya wouldn't have enough quid, which is why I think they calculate the average price). But it expresses the point.
From this chart, you can see that if Petr changes his price by 1 pip and his price remains the best, then our price in the terminal will also change by 1 pip!
I saw it on https://wm.exchanger.ru/. I recommend to take a look and even participate.
If we make a comparison, we can say that WebMoney is "little forex".
This exchange, I realized why there is a spread - it's a natural thing (I'll tell you why later)
I want to say right away that the commission taken by WebMoney system and dealing center commission as a spread - in my example, this is not analogous.
3) Prices in different brokerage companies are very similar and change the same way up to the tick.
this confirms that there is a CI and it is the same.
4) prices are slightly different in different DCs.
Mostly singles, small traders enter the Forex market through an intermediary, i.e. they do not have a registered purse themselves and cannot open orders at the Forex market.
But this wallet is given to them by the brokerage company, i.e. the brokerage company has a wallet in Forex system and executes traders' orders for some spread.
That is why trader essentially trades on broker's server, i.e. he trades in brokerage system and not in Forex system and that is why price at which we make deals is defined by brokerage itself!
So I told you how I think and what I observed myself!
I would be glad to get any criticism!!!!
So, I have told you what I think and what I have observed myself!
I will be glad to get any criticism !!!!
Nobody is hiding anything. All these secrets of palischenel are written in textbooks.
So, I`m telling you what I think and what I observed myself!
I will be glad to receive any criticism !!!!
Nobody is hiding anything. All these secrets of palischenel are written in textbooks.
Don't tell me, timbo, it's hilarious.
The author of the thread was right to point out that he knows Ohm's and Kirchhoff's laws, only he can't figure out how this paraffin runs through the wires.