Hi,
I have been reading about the relationships between the brokers and dealers in the interbank market with regard to the spread but to be honest they are written as 'university papers' and as such are too difficult for me to get a grasp of really. It seems that there is 'information' in the spread because if there wasn't the spread would remain constant indefinitely?
and can this be used to determine short term direction?
So I was wondering if anyone could simplify what happens between these players in terms of a large trade needing to be placed and how this will effect the spread.
Imagine a day where there are no big announcements so spread should remain within a tight range as there are lots of traders willing to exchange, then why for example does the spread on gpb/yen move between 0 and 5 for example?
Also, a big institution wants to liquidate a large profitable trade and then wants to go short at resistance ie 150, since it is mainly retailers who buy at resistance how is this large order dispersed into the market at the price that the big institution wants ie 150?
Any input appreciated
Cheers J
I have been reading about the relationships between the brokers and dealers in the interbank market with regard to the spread but to be honest they are written as 'university papers' and as such are too difficult for me to get a grasp of really. It seems that there is 'information' in the spread because if there wasn't the spread would remain constant indefinitely?
and can this be used to determine short term direction?
So I was wondering if anyone could simplify what happens between these players in terms of a large trade needing to be placed and how this will effect the spread.
Imagine a day where there are no big announcements so spread should remain within a tight range as there are lots of traders willing to exchange, then why for example does the spread on gpb/yen move between 0 and 5 for example?
Also, a big institution wants to liquidate a large profitable trade and then wants to go short at resistance ie 150, since it is mainly retailers who buy at resistance how is this large order dispersed into the market at the price that the big institution wants ie 150?
Any input appreciated
Cheers J