searching for holy-grail.. is this theory true?

i will straight to the point, in traditional market suppose you had some money and met with an apple seller. you bought all of the apples from him for $1.00 each, then how is that relevant to market price eventually will go up?

i would assume that when the next batch of apple coming, the apple trader decided to sell $1.50 because you bought all of the apple previously? or is it the apple seller want to keep the price high so that the product still exist in the market?

in forex market, who exactly we buy from? suppose it is the bank.. so assuming, theres a billion dollar hedge fund, and they buy 100million lot of eur/usd in a day, eventually price goes up? would this mean..the hedge fund always profitable as long as they enter big lot size?(can this considered as holy-grail?) then when price goes in their favor, they close position and cash out with profit.

some expert pls comment. thx

Suggest you read about Supply and Demand economics 101 and read a bit more about how the forex market works - what you're buying/exchanging and who from/with. Plenty of free info available online for both if you look

cointoss said:

i will straight to the point, in traditional market suppose you had some money and met with an apple seller. you bought all of the apples from him for $1.00 each, then how is that relevant to market price eventually will go up?

i would assume that when the next batch of apple coming, the apple trader decided to sell $1.50 because you bought all of the apple previously? or is it the apple seller want to keep the price high so that the product still exist in the market?

in forex market, who exactly we buy from? suppose it is the bank.. so assuming, theres a billion dollar hedge fund, and they buy 100million lot of eur/usd in a day, eventually price goes up? would this mean..the hedge fund always profitable as long as they enter big lot size?(can this considered as holy-grail?) then when price goes in their favor, they close position and cash out with profit.

some expert pls comment. thx

Click to expand...

Suppose there were 100 apple sellers and you were the only one buying. Certainly you can only buy a fraction of the total apples for sale. What would happen to price then?

Peter

only 3 posts and this thread already nailed lulziest of the year.......

wackypete2 said:

Suppose there were 100 apple sellers and you were the only one buying. Certainly you can only buy a fraction of the total apples for sale. What would happen to price then?

Peter

Click to expand...

They are totally worthless, unless an arab comes along with a camel that the owner of the apples wanted in which case the bit coin is invented. F* knows where I buy them from

Deja vu man.

Shakone said:

Suggest you read about Supply and Demand economics 101 and read a bit more about how the forex market works - what you're buying/exchanging and who from/with. Plenty of free info available online for both if you look

Click to expand...

supply and demand in economy usually means, the person with money and willing to buy the things as he/she perceived as valuable. or in other way, things in the market always sold to the highest bidder

in forex, i assume, ppl buy because see certain price is either too low.. and will go up in the future. opposite also same, as ppl sell currency, because overvalued

but im expecting some expert comment or shed some lights, how exchange rate going up and down, etc,..then we searching for holy-grail so to speak lol

wackypete2 said:

Suppose there were 100 apple sellers and you were the only one buying. Certainly you can only buy a fraction of the total apples for sale. What would happen to price then?

Peter

Click to expand...

price remain unchanged? because has no effect.. but thats why im using example as if billion dollar hedge fund buy 100 million eur/usd lot in a day.. werent the price definitely goes up? thats why im saying 'holy-grail' as the hedge fund totally control the price. but this is just assumption

cointoss said:

price remain unchanged? because has no effect.. but thats why im using example as if billion dollar hedge fund buy 100 million eur/usd lot in a day.. werent the price definitely goes up? thats why im saying 'holy-grail' as the hedge fund totally control the price. but this is just assumption

Click to expand...

price only remains the same if supply and demand are equal. whats happened to supply in this case?

Shakone said:

Suggest you read about Supply and Demand economics 101 and read a bit more about how the forex market works - what you're buying/exchanging and who from/with. Plenty of free info available online for both if you look

Click to expand...

I suggest he completely ignore supply and demand 'cause it's got fook all to do with it.

In futures, there is infinite supply. In stocks there is finite supply (float). Both markets exist to match buyers and sellers, which it does.

The reason price moves in futures markets it because of consumption of liquidity and not supply and demand in the traditional economic sense.

Stocks are pretty much the same in terms of price moves being caused primarily by consumption of liquidity but granted, a stock can become scarce and so traditional supply/demand theories do come into play.

There's times for instance when lots of people have sold shares they didn't actually have and this has gone on to such an extreme that they are forced to buy into scarcity that they themselves created. A market can be cornered in stocks too.

As for Forex, for most people they aren't even playing the forex market but betting against their broker. I don't think market dynamics come into play as much as the dynamics of your broker wanting a new red Ferrari.

DionysusToast said:

I suggest he completely ignore supply and demand 'cause it's got fook all to do with it.

The reason price moves in futures markets it because of consumption of liquidity and not supply and demand in the traditional economic sense.

Click to expand...

You hit it my friend.

Cheers

DionysusToast said:

I suggest he completely ignore supply and demand 'cause it's got fook all to do with it.

In futures, there is infinite supply. In stocks there is finite supply (float). Both markets exist to match buyers and sellers, which it does.

The reason price moves in futures markets it because of consumption of liquidity and not supply and demand in the traditional economic sense.

Stocks are pretty much the same in terms of price moves being caused primarily by consumption of liquidity but granted, a stock can become scarce and so traditional supply/demand theories do come into play.

There's times for instance when lots of people have sold shares they didn't actually have and this has gone on to such an extreme that they are forced to buy into scarcity that they themselves created. A market can be cornered in stocks too.

As for Forex, for most people they aren't even playing the forex market but betting against their broker. I don't think market dynamics come into play as much as the dynamics of your broker wanting a new red Ferrari.

Click to expand...

There is not infinite supply of the underlying commodity. You can't just discount what effect that has on prices just because there's an infinite supply of contracts to be written.

Peter

Hey, Pete,

Who's your friend in the pix? I run with a Goffin Cockatoo who's owned me for the last 36 years. I'd be lost without him. He/She looks good! Give 'em a head scratch for me. Skip's just finishing his moult. Feathers EVERYWHERE! You know what I'm saying. LOL

wackypete2 said:

There is not infinite supply of the underlying commodity. You can't just discount what effect that has on prices just because there's an infinite supply of contracts to be written.

Peter

Click to expand...

You are right... That's why the prices come back to normalization after swinging due to market pressures. Miss a trade today, don't worry, there will another tomorrow.

Cheers

DionysusToast said:

I suggest he completely ignore supply and demand 'cause it's got fook all to do with it.

In futures, there is infinite supply. In stocks there is finite supply (float). Both markets exist to match buyers and sellers, which it does.

The reason price moves in futures markets it because of consumption of liquidity and not supply and demand in the traditional economic sense.

Stocks are pretty much the same in terms of price moves being caused primarily by consumption of liquidity but granted, a stock can become scarce and so traditional supply/demand theories do come into play.

There's times for instance when lots of people have sold shares they didn't actually have and this has gone on to such an extreme that they are forced to buy into scarcity that they themselves created. A market can be cornered in stocks too.

As for Forex, for most people they aren't even playing the forex market but betting against their broker. I don't think market dynamics come into play as much as the dynamics of your broker wanting a new red Ferrari.

Click to expand...

To suggest there is infinite supply is silly.

The OP posted about apples in a market and why price moves. If he doesn't understand that, then my opinion is he should first start with understanding supply and demand, since this is how he framed the question and how he indicated he wants to understand things. He now doesn't want to understand such things, which is fair enough.

in traditional market suppose you had some money and met with an apple seller. you bought all of the apples from him for $1.00 each, then how is that relevant to market price eventually will go up?

Click to expand...

Note above, he doesn't understand how the price of apples may change in a traditional market.

You say the reason price moves in futures is because of consumption of liquidity. Only this? When price opens after the weekend, what liquidity was consumed in the mean time to move price? How could it move if liquidity wasn't consumed? Then one could ask why is liquidity consumed? Might it have something to do with demand at a particular price?

I think it's a fair assumption that the price at which people are willing to transact at is relevant to price movement, i.e. the supply and demand is relevant. You think otherwise.

When you look to go long or short, in what size can you transact at a particular price? Infinite? Is there some sort of supply at a particular price or not, such that if demand exceeds that, the price might move? You seem to think this is all irrelevant, so I'll stop here. We clearly have completely different ideas about this, as I think supply and demand is essential to price movement and you think 'it's got fook all to do with it', and I doubt the difference is reconcilable, but I do hope your understanding works well for you and gives you plenty of profits.

wackypete2 said:

There is not infinite supply of the underlying commodity. You can't just discount what effect that has on prices just because there's an infinite supply of contracts to be written.

Peter

Click to expand...

You aren't trading the underlying commodity.

You are trading contracts and there is an infinite supply of contracts.

Perceived scarcity of the underlying product may cause people to come to the market but it is not what causes the price to move, which is the discussion here.

Look what happened recently when some outfit held their Gold Futures contracts till expiry and Goldman had to pay them a sweetener to avoid delivering the physical gold. You think these markets are all about the underlying? For very few they are about hedging, for the rest it's gambling.

It's all about the size of the 'trousers' on the part of the counterparty.

Shakone said:

To suggest there is infinite supply is silly.

Click to expand...

Yet it is absolutely true

Shakone said:

The OP posted about apples in a market and why price moves. If he doesn't understand that, then my opinion is he should first start with understanding supply and demand, since this is how he framed the question and how he indicated he wants to understand things. He now doesn't want to understand such things, which is fair enough.

Click to expand...

The markets we trade are 4 way auctions. There is no 4 way auctions for apples, nor can a 'bidder' create apples that don't exist to make an apple market.

Shakone said:

Note above, he doesn't understand how the price of apples may change in a traditional market.

Click to expand...

Possibly.

Shakone said:

You say the reason price moves in futures is because of consumption of liquidity. Only this? When price opens after the weekend, what liquidity was consumed in the mean time to move price? How could it move if liquidity wasn't consumed? Then one could ask why is liquidity consumed? Might it have something to do with demand at a particular price?

Click to expand...

There are many factors that bring people to the market. On most days, it is speculation that is moving price up and down as well as the markets rebalancing as they get too short/too long. It's a cycle of speculation, over commitment, rebalancing.

Shakone said:

I think it's a fair assumption that the price at which people are willing to transact at is relevant to price movement, i.e. the supply and demand is relevant. You think otherwise.

Click to expand...

It's the result of short term speculation on 90% of days.

Shakone said:

When you look to go long or short, in what size can you transact at a particular price? Infinite? Is there some sort of supply at a particular price or not, such that if demand exceeds that, the price might move? You seem to think this is all irrelevant, so I'll stop here. We clearly have completely different ideas about this, as I think supply and demand is essential to price movement and you think 'it's got fook all to do with it', and I doubt the difference is reconcilable, but I do hope your understanding works well for you and gives you plenty of profits.

Click to expand...

If size at price was infinite, then liquidity would be infinite and price would not move.

In futures, when you talk about supply of contracts available at a particular price, you would actually be discussing the long AND short side. When you go short, you need a supply of contracts on the bid. So when shorting you are effectively buying a short contract and price is going down.

In effect, buying short contracts moves price down through the supply of contracts. This supply of contracts is infinite because they are merely created at the whim of a liquidity provider. There is no scarcity, there is no over-supply.

This is not supply & demand economics.

Even with stocks where scarcity is a potential issue, certain participants can buy and sell what they don't have anyway. It's down to the size of there spheres as to how far they go with that, not inventory levels.

DionysusToast said:

Yet it is absolutely true



The markets we trade are 4 way auctions. There is no 4 way auctions for apples, nor can a 'bidder' create apples that don't exist to make an apple market.



Possibly.



There are many factors that bring people to the market. On most days, it is speculation that is moving price up and down as well as the markets rebalancing as they get too short/too long. It's a cycle of speculation, over commitment, rebalancing.



It's the result of short term speculation on 90% of days.



If size at price was infinite, then liquidity would be infinite and price would not move.

In futures, when you talk about supply of contracts available at a particular price, you would actually be discussing the long AND short side. When you go short, you need a supply of contracts on the bid. So when shorting you are effectively buying a short contract and price is going down.

In effect, buying short contracts moves price down through the supply of contracts. This supply of contracts is infinite because they are merely created at the whim of a liquidity provider. There is no scarcity, there is no over-supply.

This is not supply & demand economics.

Even with stocks where scarcity is a potential issue, certain participants can buy and sell what they don't have anyway. It's down to the size of there spheres as to how far they go with that, not inventory levels.

Click to expand...

If there are an infinite supply of contracts, then there is infinite liquidity. Which means you can never consume the liquidity, which according to you then means that price would never move, which is patently false, because it does move. I noticed how you dodged the question re how price might move without any liquidity being consumed.

You do tie yourself in knots with this nonsense.

We can safely conclude that there is not an infinite supply of contracts for trading at any price, there is a finite amount.

Also you might want to consider what a futures contract actually entitles you to.

Also you might want to consider what is required to trade a futures contract, and what would be required for an infinite number of contracts to be traded.

Shakone said:

You do tie yourself in knots with this nonsense.

Click to expand...

Peter

So apparently the actual, perceived, or projected supply of a commodity has no effect on prices??

Peter