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Interesting Zero Sum Game

vontogr (togr)
Oct 05 2016 at 11:32
4862 inlägg
Hi,

Daily traded volume on Forex market is about $6 trillion.

Every trade has to have 2 counterparts.

So every time you for example buy 1 lot EURUSD someone on the other side of planet has to sell EURUSD.
So each bid and ask need to find counterpart to execute the trade.

My point is if the same amount of currency is sold and bought at the very similar price, how can the price move.

E.g. you sell 100 000 EUR and someone buy these 100 000 EUR to make the trade happen.

I would say the price move DOWN because more people SELL the currency but how can be such sell executed without someone BUYING the same amount of currency ? :)
Ivan (StoneHeart)
Oct 05 2016 at 12:14
131 inlägg
togr posted: ...
I would say the price move DOWN because more people SELL the currency but how can be such sell executed without someone BUYING the same amount of currency ? :)
Some of SELLER change his price to lower.
It is possible, if he expect price to move 100 pips down, and is ready to enter to market at (5-10 pips) worst price, where is BUYer available.
This is not possible for those , who already BUY, and expect to SELL at higher price. ... hi is also SELLER, but hi is NOT ready to sell at worse price.
McLeonis (McLeonis)
Oct 05 2016 at 12:51
14 inlägg
Hello Togr,
Here is my opinions:
Currency has a highest liquidity. Not only trader buy and sell currency. Central banks, Commercial bank, InterBank, Retail, Hedge Fund... The market is more large than we think and we know.
So, there is always someone take the counterpart to execute your trade. About the same amount of currency, your broker performing that task.
I don't throw darts at a board – I bet on sure things.
5astelija
Oct 05 2016 at 13:28
54 inlägg
I don't see the paradox here.. The chart just shows the prices buyers and sellers came to agreement in the past.
Current agreement price doesn't care about other agreements, it can be any value - though it is usually close to the last price, which makes charting possible.
vontogr (togr)
Oct 05 2016 at 17:26
4862 inlägg
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
SaltyWaters
Oct 05 2016 at 18:03
247 inlägg
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

I understand your point. It makes perfect sense. It seems someone is manipulating the price. Actually, manipulating the whole thing!

The best excuse I've heard is the orders are filled for the best offer. If so, why it keeps moving while on waiting.
5astelija
Oct 06 2016 at 06:12
54 inlägg
nope, still can't see it :D

Orders need a counterpart to fill, yeah, but there is usually more bulls than bears or vice versa. The price goes up because bulls buy everything at price 1€ - to buy more, bulls are then ready to pay price 2€ which more people are willing to sell at.
5astelija
Oct 06 2016 at 06:13
54 inlägg
Well, the zero sum thing maybe an illusion: we usually think the chart is some continuous line, like y=2x or something, while it is actually a series of INDIVIDUAL points we like to connect together 😑
tandixoo
Oct 06 2016 at 06:30
1 inlägg
price that we see in our platform was created in interbank market,,,, interbank market is closed market and have limited access. only some large bank and central bank have access to interbank market.


prices are determined based on the value of deals and accepted by market participants in the interbank market
so prices that we see in our platform is the price that has been transacted in interbank market....


McLeonis (McLeonis)
Oct 06 2016 at 06:31
14 inlägg
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.
I don't throw darts at a board – I bet on sure things.
shihaskni
Oct 06 2016 at 07:23
2 inlägg
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.
Rustan mallari (tankbeta)
Oct 06 2016 at 08:25
171 inlägg
following this thread.
Plan your trades and trade your plans.
vontogr (togr)
Oct 06 2016 at 09:40
4862 inlägg
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.
xgavinc
Oct 06 2016 at 09:50
235 inlägg
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
Oct 06 2016 at 10:05
235 inlägg
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.
vontogr (togr)
Oct 06 2016 at 10:18
4862 inlägg
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
xgavinc
Oct 06 2016 at 11:47
235 inlägg
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 (McLeonis)
Oct 06 2016 at 11:52
14 inlägg
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. 😁
I don't throw darts at a board – I bet on sure things.
5astelija
Oct 06 2016 at 13:10
54 inlägg
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
xgavinc
Oct 06 2016 at 13:46
235 inlägg
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... 😭

Damn you turtle!
For every loss there should be at least an equal and opposite profit.
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