
Market Structure & Why other People Matter - Part2: Bizarre Bazaar
LittleFishy Posted 13 July in #Trade #Currency #Liquidity #Participants #Sales #Knowledge #Speculation #Time #Depth32/47
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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…