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Interesting Zero Sum Game
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shihaskni

Biedrs kopš Sep 29, 2016  2 ieraksti shihaskni Oct 06 2016 at 07:23
McLeonis posted:
togr posted:
The point is if at every moment there are equal buy/sell orders (as each order needs counterpart to execute) how could this move th e price anywhere

This is a very wide question so I'll cut to the chase: supply and demand. That how the price move.
There is always someone take the counterpart to execute your trade doesn't mean they will take it at any cost (price). That depend on their policies, strategy, reserve ratio...
High Demand + Low Supply = Higher Price
Low Demand + High Supply = Lower Price
The price move down when more people selling than buying and there aren't equal buy/sell orders.
Sometime you get requote, slippage when the broker don't have enough counterpart to execute your orders.

tankbeta

Biedrs kopš Aug 21, 2010  169 ieraksti Rustan mallari (tankbeta) Oct 06 2016 at 08:25
following this thread.

Plan your trades and trade your plans.
togr

Biedrs kopš Feb 22, 2011  3691 ieraksti vontogr (togr) Oct 06 2016 at 09:40
shihaskni posted:
McLeonis posted:
togr posted:
The point is if at every moment there are equal buy/sell orders (as each order needs counterpart to execute) how could this move th e price anywhere

This is a very wide question so I'll cut to the chase: supply and demand. That how the price move.
There is always someone take the counterpart to execute your trade doesn't mean they will take it at any cost (price). That depend on their policies, strategy, reserve ratio...
High Demand + Low Supply = Higher Price
Low Demand + High Supply = Lower Price
The price move down when more people selling than buying and there aren't equal buy/sell orders.
Sometime you get requote, slippage when the broker don't have enough counterpart to execute your orders.


The thing is
...The price move down when more people selling than buying...

If people are selling someone has to buy the same amount.

I like what I trade, I trade what I like
xgavinc

Biedrs kopš May 11, 2011  235 ieraksti xgavinc Oct 06 2016 at 09:50
McLeonis posted:
togr posted:
The point is if at every moment there are equal buy/sell orders (as each order needs counterpart to execute) how could this move th e price anywhere

This is a very wide question so I'll cut to the chase: supply and demand. That how the price move.
There is always someone take the counterpart to execute your trade doesn't mean they will take it at any cost (price). That depend on their policies, strategy, reserve ratio...
High Demand + Low Supply = Higher Price
Low Demand + High Supply = Lower Price
The price move down when more people selling than buying and there aren't equal buy/sell orders.
Sometime you get requote, slippage when the broker don't have enough counterpart to execute your orders.


Exactly. Go to 3 different currency exchanges (Bureau de Change for example)... everyone is offering a different price to exchange currency, the supply and demand for currency moves the price. The larger moves come from banks exchanging currency with other banks (eg. Bank A needs CAD, Bank B has a lot of CAD and sells CAD to bank A for USD at the best rate - USDCAD moves the most, but all USD pairs are affected by the transaction). Other factors like interest rates will also move price due to bonds and other factors... everything from bonds and savings accounts to the traveler exchanging currency are linked and influence the 'market', therefore moving prices.

A myth in Forex trading is that for you to win, another trader must lose... this is simply not true, exchanging currency on returning from your overseas holiday (may gain or lose a bit, a lot of bits move rates, hence moves in price), issuing bonds (at an agreed price) also moves price, etc... it's simply not trader vs. trader (so be nice to fellow traders, they are not your enemy :-D). Wall Street shows make it seem like one trader's win is the other trader's loss, when in fact it's a competition for all traders to win the most, the competition is for highest bonus payouts. Chances of direct counter party trades with a fellow trader, and even less with a trader you know, is infinitely low. I somewhat digress...

For every loss there should be at least an equal and opposite profit.
xgavinc

Biedrs kopš May 11, 2011  235 ieraksti xgavinc Oct 06 2016 at 10:05
togr posted:
shihaskni posted:
McLeonis posted:
togr posted:
The point is if at every moment there are equal buy/sell orders (as each order needs counterpart to execute) how could this move th e price anywhere

This is a very wide question so I'll cut to the chase: supply and demand. That how the price move.
There is always someone take the counterpart to execute your trade doesn't mean they will take it at any cost (price). That depend on their policies, strategy, reserve ratio...
High Demand + Low Supply = Higher Price
Low Demand + High Supply = Lower Price
The price move down when more people selling than buying and there aren't equal buy/sell orders.
Sometime you get requote, slippage when the broker don't have enough counterpart to execute your orders.


The thing is
...The price move down when more people selling than buying...

If people are selling someone has to buy the same amount.


Let's take GOLD-USD as a small example, The current rate is say $1265.00, you have gold you want to sell to me, you say 'I will sell my gold to you at $1270.00 (assuming there is demand)... I tell you the price is too high, go try somewhere else, I'm willing to buy your gold for $1260.00, no more. (damn, no demand for gold eh?)... you agree to $1260.00... the market price changes from $1265.00 to $1260.00 (agreed market price) indicating an agreement took place to sell at a lower price because of lower demand for gold - price moved. Same for every other pair exchange, except a USDCAD for example will effect all other pair prices linked to USD (depending on a gain or loss of USD value based on the USDCAD exchange agreement).

For every loss there should be at least an equal and opposite profit.
togr

Biedrs kopš Feb 22, 2011  3691 ieraksti vontogr (togr) Oct 06 2016 at 10:18
xgavinc posted:
togr posted:
shihaskni posted:
McLeonis posted:
togr posted:
The point is if at every moment there are equal buy/sell orders (as each order needs counterpart to execute) how could this move th e price anywhere

This is a very wide question so I'll cut to the chase: supply and demand. That how the price move.
There is always someone take the counterpart to execute your trade doesn't mean they will take it at any cost (price). That depend on their policies, strategy, reserve ratio...
High Demand + Low Supply = Higher Price
Low Demand + High Supply = Lower Price
The price move down when more people selling than buying and there aren't equal buy/sell orders.
Sometime you get requote, slippage when the broker don't have enough counterpart to execute your orders.


The thing is
...The price move down when more people selling than buying...

If people are selling someone has to buy the same amount.


Let's take GOLD-USD as a small example, The current rate is say $1265.00, you have gold you want to sell to me, you say 'I will sell my gold to you at $1270.00 (assuming there is demand)... I tell you the price is too high, go try somewhere else, I'm willing to buy your gold for $1260.00, no more. (damn, no demand for gold eh?)... you agree to $1260.00... the market price changes from $1265.00 to $1260.00 (agreed market price) indicating an agreement took place to sell at a lower price because of lower demand for gold - price moved. Same for every other pair exchange, except a USDCAD for example will effect all other pair prices linked to USD (depending on a gain or loss of USD value based on the USDCAD exchange agreement).


But it does not work this way,

you see the price at which you instantly buy/sell the pair
counterpart do the same
broker takes the difference between bid and ask

I like what I trade, I trade what I like
xgavinc

Biedrs kopš May 11, 2011  235 ieraksti xgavinc Oct 06 2016 at 11:47
How does it not work that way?

You determine the best price at which you want to buy or sell by either placing a trade (accepting a price) or not (declining a price).

Spread is bid and ask between you and broker, and broker gets the best quote in that negotiation regardless (spread sounds better than 'our cut' :-D). Commission and spread can just as well be seen as the same thing, the broker has already subtracted that from your base currency no matter if you win or lose on the trade (in a loss, you lose trade + spread, in a win, you win trade - spread).

I've already forgotten what the original question was... lol!

For every loss there should be at least an equal and opposite profit.
McLeonis

Biedrs kopš May 16, 2014  12 ieraksti McLeonis (McLeonis) Oct 06 2016 at 11:52
togr posted:
The thing is
...The price move down when more people selling than buying...
If people are selling someone has to buy the same amount.

Please take a look at the ask and bid price. That is the price the market ready to buy and sell at the moment.

If your questions exactly is: Why some people still buying a currency when it value is dropping low?
There are so many reasons:
+ The central bank want to keep their exchange rate stability. So they buy it to reduce the supply. Low Supply = Higher Price.
+ Investor want to buy the currency at the low point. (If you have less capital, you are done)
+ An international company need to buy goods in this country. So whatever the exchange rate is, they need that currency. The loss will be calculated into provision account and charged to the product. If they are from the currency in the upper hands of the exchange rate, they could buy more product.

Forex almost is a zero-sum-game. Money change their masters in crisis. Smart investors will win.
Safe trading everyone. lol

I don't throw darts at a board – I bet on sure things.
5astelija

Biedrs kopš Oct 15, 2014  42 ieraksti 5astelija Oct 06 2016 at 13:10
I think everyone here understands the consept of supply and demand, and reasons why price moves - vontogr's question is more philosophical one.

I guess he means the price change as paradox like the Zeno's paradox: turtle is ahead of a rabbit but the gap is getting smaller - first 50%, then 25%, then 12.5% and so on, but the rabbit never reaches the turtle.

The relation to forex is a bit misty but it's there :D

never ring the bell
xgavinc

Biedrs kopš May 11, 2011  235 ieraksti xgavinc Oct 06 2016 at 13:46
5astelija posted:
I think everyone here understands the consept of supply and demand, and reasons why price moves - vontogr's question is more philosophical one.

I guess he means the price change as paradox like the Zeno's paradox: turtle is ahead of a rabbit but the gap is getting smaller - first 50%, then 25%, then 12.5% and so on, but the rabbit never reaches the turtle.

The relation to forex is a bit misty but it's there :D


The rabbit, like me, is long gold... cry

Damn you turtle!

For every loss there should be at least an equal and opposite profit.
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