Hi Leon,
What precisely would you like to understand?
regards
To put it simply, Can price change with no trade happening?
Edit: Remember that a trade is made at a price before It becomes the price.
EDIT2: To anyone who answers, can you explain how and why.
That depends upon what is your definition of a'price movement'.
Theoretically the answer is yes. It is best explained with an illuion of an instrument that was illiquid. Take any illiquid stock for example. The price that you get quoted by a broker completely depends upon in which the current bid(s) and offer(s) are.
So, let's say there is one bid at $5.00 and one provide at $5.50 - and we assume that both sides are for 1000 shares of that stock. Your quote for 1000 stocks would be $5.00 to $5.50. Presently a third party joins in and puts a bid at $5.25 and your subsequent new price is $5.25 to $5.50.
Technically, not only the spread has shifted (narrowed) without a trade having gone , the price has changed as well - therefore the new quote. If the offer now decides to up the amount to $5.75, then you get the old spread of $0.50 quoted again but using a new price of $5.25 to $5.75.
You might want to look at it from a charting perspective (which in history came after than market prices), and also the confusion arises in my view because particular charts upgrade on the basis of'last trade' which means without a real trade going through (like to a tick chart), you wouldn't see a real change in price until the upcoming real transaction or request for a new quote.
Within an instrument as liquid as FX (really the most liquid instrument on the planet), the time intervalls are often too small to discern a price movement without a trade having taken place. This liquidity offers easy graphs without (many) openings caused by price movements without trades inbetween.
regards
Hmmm, when I add spread to the equation I get confused.
Thus, could it be said that:
'Price only changes when a transaction is made, unless someone makes a bid/offer within the spread'...?
My mind it hurting.
Thats what I was originaly saying, but then.... Im becoming more confused.
Getting packed = A trade was made
No, Leon -
Price changes only when current bid's and provide's shift (and one way of this occurring is such as that a bid is now eager to pay the given price).
The market can exchange numerous times in precisely the same price, e.g. if there's a large offer that may absorb many small-sized bids at one price you won't find the price moving at all although maybe 50 transactions have gone through.
Once the deal is drained at a single degree and bids are still coming in at that level, the second offer higher up will determine the price shift.
regards
3 individuals:
# 1 Owns a Guitar.
# 2 3 want to Buy it.
#2. I will give Bid $100.00
#3. I will give Bid $110.00
#2. Hmph. $115.00
#3. $115.50
Price does not alter Until #1 Says Sold.
Bid/Ask Have been very volitle though.
Why?
#4. Guitar for sale. $80.00.
No, Leon -
Price changes only when current bid's and provide's change (and one means of this occurring is for example a bid is currently willing to pay the given price).
If a trade is made?
The market can exchange numerous times at precisely the exact same price, e.g. when there's a sizable offer that may absorb lots of small-sized bids at one price you won't find the price moving whatsoever but maybe 50 trades have gone .
Im fully aware of the.
When the offer is exhausted at one level and bids are still coming in at that level, the next offer greater up will establish the price change.
Yep
regards
daytrading
It feel like when It comes to this conversation we are all running around in circles and keep missing eachother.