Abstract thinking - page 2
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))) If only two people make a trade at any given time (demand equals supply), the price will not move. You need an imbalance to move the price.
Two people make a bet - one person bets that one person in the next pair will bet on going up and the other person will bet on going down? What is the bet - which of the two bets will go up and which will go down?
And then why should the price move if there are only two market participants at any given time and one of them is always up and the other is always down (otherwise there is no bet)?
No. They are betting on how the people in line behind them will move the price with their trades.
I use the term "bet" and not "deal" because the goal of the people in line is not to buy or sell the product, but to speculate. Their task is to correctly predict the actions of the other people in line.
The deal looks like a sale or purchase between the participants, but in essence it is a sweepstake because no one wants the product itself. These bets are what move the price on the exchange market.
No. They are betting on how people in line behind them will move the price of their trades.
I use the term "bet" rather than "deal" because the goal of the people in line is not to buy or sell a commodity, but to speculate. Their task is to correctly predict the actions of others in the line.
The deal looks like a sale or purchase between the participants, but in essence it is a sweepstake because no one wants the product itself. These bets are what move the price on the exchange market.
That's just it!
People in these queues aren't moving the price!
They are trying to predict the price.
What you are describing is a derivatives market or "kitchen" forex versus the real market.
I made a bet with a man - I bet on a rise and he bet on a fall.
How did we move the price?
We didn't
Two people have made a bet - against each other.
The price won't move from there.
Why wouldn't it?
If there is only one seller of 5 pieces of a product on the market who wants to sell it for $1 each, and only one buyer who wants to buy 5 pieces at $1 each - how will the price change after their transaction?
It won't.
The market is well described in Chekhov's short story Children's Players. The boys are playing bingo. The game proceeds with great excitement. But then everyone is sent to bed and "Pennies are lying around, having lost their power until a new game.
In a very abstract way, the market in which we trade (stock exchange, Forex) is the trading of bills of exchange, which have no real value. When this game gets boring, it will all fall underfoot, which has happened many times.
The market is well described in Chekhov's short story 'Detsvora'. The boys are playing bingo. The game proceeds with great excitement. But then everyone is sent to bed and "Pennies are lying around, having lost their power until a new game.
In a very abstract way, the market in which we trade (stock exchange, forex) is the trading of bills of exchange, which have no real value. When this game gets boring, it will all fall underfoot, which has happened many times.
I made a bet with the man - I bet on the rise and he bet on the fall.
That's just it!
People in these queues aren't moving the price!
They are trying to predict the price.
What you are describing is a derivatives market or "kitchen" forex versus the real market.
The people in the queues are moving the price.
It's just that each person contributes to the price shift, which depends on the volume of their trade.
For example: You and I are at the head of the queue. You are selling and I am buying. I want to buy 1000 apples for 20 rubles/kg, but you only have 200. The person behind you has another 800, but at 30 rubles/kg. I buy 200 apples from you for 20 and another 800 from the person behind you for 30. After that, the price of apples rose to 30 rubles per kg, thanks to me. In parallel, we made a bet with you. I have bet my apples (which I need not for food, but for resale) on the fact that people after me in line will buy large quantities of apples, regardless of price, and therefore the price will rise, and you believe that people will not buy many apples, and therefore their quantity will be so large that the price will go down.
We step aside and wait to see what other people in line will do. At a certain point, I will decide to sell my apples, taking up my place in the queue again, but the price that will be there at that point will either meet my hopes, or I will sell the apples at a loss.