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This new idea of a market (or bazaar, or exchange, or any other name it might go by) seems great to everyone. Everybody leaves the meeting and spends the rest of the week preparing for the big Saturday ahead of them. The sun rises Saturday morning and the town square is full of excited participants and the air is filled with the buzz of buying and selling. Many of these people will be doing plenty of both since they need to sell their items for florps and then buy the things they need with those florps. (I know, I know. Just stick with me here) Aaron Applegrower is eager as his first customer approaches and sees his basket full of apples. Of course, the first question is, “How much do you charge for an apple?” Again, remember that there’s no magical force dictating price: The power of pricing is in the hands of the two parties who are trying to exchange something. Up until this day, Aaron has always traded with Frank at the rate of 2 florps for 1 apple. That still seems reasonable enough and so that’s the price he quotes to this new customer, who is happy to pay that price. He only needs 1 apple for now, so he hands over 2 florps and gets his 1 apple. Aaron is the seller, this ne…
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Atashi_Tada avatar

I like your funny charts :)

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Why does the price of anything change? Forget the fancy things we trade like currencies, stocks, or commodity futures, but why does anything change in price? In fact, back up one more step: Why does anything even have a price to begin with? If you haven't taken time to devote yourself to learning this topic, you're leaving a giant hole in your knowledge base. It means that you're currently attempting to make a profit from the change in price of something without even knowing why its price is changing. It will take some time to help explain this concept from the ground up, but it will be well worth your patience. To start, I'm going to take you back in time. It's a time where there are no computers, no phones, no communication devices of any kind. If you need to interact with somebody, you'll have to meet them face-to-face. Because of this, any exchange of goods or services (food, clothing, house cleaning, anything) has to be done directly from one individual to another and that has to happen in person.During this time, there are no such things as stocks, bonds, options, equities, or futures, and the only currency is called a “florp”. Florps are a universal currency used by everybod…
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LittleFishy avatar

Thanks for the support, guys! Part 2 will be out by Monday next week at the latest :)

LittleFishy avatar

And part 2 is up :)
http://www.dukascopy.com/fxcomm/fx-article-contest/?Market-Structure-Why-Other-People&action=read&id=1438

LittleFishy avatar

True, this is aimed to help build the important basic concepts, so it might be nothing new to someone who is already very knowledgeable. I will be leading this into how to use all of this information in a modern, fast-paced market, though. It just takes some time and needs to be broken up properly and introduced step-by-step.

Hopefully it was still a good read, though! :)

Belikewater avatar

Nice pics!.+1 If you comment on my trader cotest profile, I will aprecciate! http://www.dukascopy.com/tradercontest/?action=blog&trader=Belikewater

Atashi_Tada avatar

i love this article, well done!!

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