Hi,
I have a crucial trade question:
When I began trading stocks, it was quite easy to understand how the price is being formed:
There are traders that place an order with a fixed amount of stocks, let's say a buy of 50.
When they select market order, the system - the computer algorithm - is automatically looking for someone (or a group of individuals), who likes to sell an amount of 50 stocks at the current price.
If it doesn't succeed, it may move the price, until it has found the desired bids.
Its a technological thing - when there are enough market participants, it will find an exchange in a fast way; when there are not many participants, a big order may move the price a lot.
However, we have transparency. We can always look into the order book, and see what happened, and whether everything happens according to market standards.
Betrayal is not possible, as everything is surveillanced.
But: I also learned that an index is being formed by the movement of its stocks.
Let's take for example the german DAX.
It has 30 stocks, and depending on their performance, the index moves.
But as we know it is the case, that you can trade the index itself.
With futures, cfds etc.
And traders, trading these securities, trade in general high amounts of money:
They are looking at the volume, the exchange of futures itself shows, not at the buy/sell pressure of the 30 stocks, on which the index is actually based on.
Now - what does the price of an index move?!
The stocks, that it is build on, or the - let me say it this way - artificially created future exchange, of the index?!
Isn't it crystal clear, that only real performance (stocks) create real movement, while artificial created exchanges (created to bet) do nothing productive?
And therefore cannot move the price itself?
But it seems to be the other way round.
Futures trader subscribe to volume feeds of futures, than checking 30 stocks each day by routine.
And don't tell me it ain't this way,...
They look at average NFP rolls, at average market data, than at specific data about the 30 companies.
How does that make sense?!
How can we base trading decisions on the behavior of synthetic exchanges, than on the stocks itself?!
[And: what about currency exchanges, where we do not have any transparency at all?!
We are supposed to believe the machines, that work automatically... Or manually? That's insane.]
Thanks for any input.
PS: I've found this video to explain a little bit...
https://youtu.be/ngpDWsfiM-A
I have a crucial trade question:
When I began trading stocks, it was quite easy to understand how the price is being formed:
There are traders that place an order with a fixed amount of stocks, let's say a buy of 50.
When they select market order, the system - the computer algorithm - is automatically looking for someone (or a group of individuals), who likes to sell an amount of 50 stocks at the current price.
If it doesn't succeed, it may move the price, until it has found the desired bids.
Its a technological thing - when there are enough market participants, it will find an exchange in a fast way; when there are not many participants, a big order may move the price a lot.
However, we have transparency. We can always look into the order book, and see what happened, and whether everything happens according to market standards.
Betrayal is not possible, as everything is surveillanced.
But: I also learned that an index is being formed by the movement of its stocks.
Let's take for example the german DAX.
It has 30 stocks, and depending on their performance, the index moves.
But as we know it is the case, that you can trade the index itself.
With futures, cfds etc.
And traders, trading these securities, trade in general high amounts of money:
They are looking at the volume, the exchange of futures itself shows, not at the buy/sell pressure of the 30 stocks, on which the index is actually based on.
Now - what does the price of an index move?!
The stocks, that it is build on, or the - let me say it this way - artificially created future exchange, of the index?!
Isn't it crystal clear, that only real performance (stocks) create real movement, while artificial created exchanges (created to bet) do nothing productive?
And therefore cannot move the price itself?
But it seems to be the other way round.
Futures trader subscribe to volume feeds of futures, than checking 30 stocks each day by routine.
And don't tell me it ain't this way,...
They look at average NFP rolls, at average market data, than at specific data about the 30 companies.
How does that make sense?!
How can we base trading decisions on the behavior of synthetic exchanges, than on the stocks itself?!
[And: what about currency exchanges, where we do not have any transparency at all?!
We are supposed to believe the machines, that work automatically... Or manually? That's insane.]
Thanks for any input.
PS: I've found this video to explain a little bit...
https://youtu.be/ngpDWsfiM-A
...and love yo'biography, Mitch! 
