How price is moved actually?

[luckyvictor]

Hi All

After seeing the volatility recently, I am starting thinking again the very fundamental question, how price is actually moved?

The reason is, before last week, in Dow for example, we see price moved usually a few hundred points, and the trading could happen between retail traders and institutions. Since last week, the volatility is very high, meaning to achieve a few hundred points, it doesn't take days to complete, but just a few minutes.

So who is participating in this trading now, and be able to move price that much in such a short time? can retail really generate the buying/selling pressure?

Can someone really explain the how price is moved and perhaps 'make up' a story to explain how the two forces participated in the market since last week?

Appreciated!

 

[MasterOfCoin]

Oh dear, oh dear, I fear that's going to take a rather long explanation.

I hope someone will jump in and say that it's already been covered in such-and-such a thread from way back when.

But if not, I'll give it a go.

Just don't expect a textbook quality lesson !

 

[counter_violent]

Hi All

After seeing the volatility recently, I am starting thinking again the very fundamental question, how price is actually moved?

The reason is, before last week, in Dow for example, we see price moved usually a few hundred points, and the trading could happen between retail traders and institutions. Since last week, the volatility is very high, meaning to achieve a few hundred points, it doesn't take days to complete, but just a few minutes.

So who is participating in this trading now, and be able to move price that much in such a short time? can retail really generate the buying/selling pressure?

Can someone really explain the how price is moved and perhaps 'make up' a story to explain how the two forces participated in the market since last week?

Appreciated!

Basically, prices can only move because of a supply/demand imbalance. If there is too much of something, then prices will fall until such time that there becomes a scarcity of something, then prices will rise.

 

[luckyvictor]

Oh dear, oh dear, I fear that's going to take a rather long explanation.

I hope someone will jump in and say that it's already been covered in such-and-such a thread from way back when.

But if not, I'll give it a go.

Just don't expect a textbook quality lesson !

Hi MoC, please give it a go, I believe I used to understand it, but this crazy volatility really break my understanding, where does this huge imbalance come from? How the two forces (presumably institution and retail traders) act in this scenario?

Please, give it a go and make up a nice story to explain the crazy market movement last week

 

[luckyvictor]

Basically, prices can only move because of a supply/demand imbalance. If there is too much of something, then prices will fall until such time that there becomes a scarcity of something, then prices will rise.

So do you think the sell off last week would be kick started by institution or retail? Retail can't really act that fast right? And with such great power? So it seems to make sense that institutions were actively selling lower and lower (forget they have other ways to make money) to dump the shares in hand