Why does the price move? The answer is here!!! - page 15
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So there's no haggling. :)
And anyway, crosses are the same currencies. And they also have big trades in them - so the cross is taken out of the calculation of major pairs :)
So here goes. Sorry for such maybe stupid question, but I still cannot understand the nature of price change on the foreign exchange market. That is, how many lots must be sold, for example, for the price to change by 1 pip for a certain pair. Or this change may be somehow reflected in the imbalance of other parameters.
After all, if someone sells, someone else buys his lot, and the reality is that the two demands are actually mutually absorbed, and hence the difference between supply and demand is equalized.
WHY then is there a price movement, since the number of purchases always equals the number of sales (it's not like the broker himself is buying and selling).
Logically , the quotes that are inside the spread are overlapped by the purchases/sales that have already taken place.
And if now someone wants to buy, the broker must find a counterparty. And apparently he will search only through stop orders (because the broker will not work at a loss and buy for me the currency at a higher cost than I want, that is at the limit order). This means that the price I would buy would move down towards my counterparty. Then what price will appear in the terminal - mine, his, or somewhere in between? So my buying moves the price downwards, not upwards. I am completely confused and confused!
i.e., how many currencies should be bought/sold for a 1 pip movement? You can not comment on it, just give me a link at least...
Very grateful in advance to everyone who responded to the request.
Otherwise I come to the conclusion that you, in fact, professional programmers, write EAs and indicators simply DO NOT UNDERSTAND the laws and causes of market movements (so what is actually being written?)
It's been a long time since the start of this thread. After reading the entire thread, to be honest, it was hard to find a concrete and comprehensive answer. Some started to clarify relationships, some went into fundamental analysis about export-import operations. Although the author's question was not really about that. Taking some of the statements made by the participants of this forum as a basis, and adding some of my own reflections, this is what I ended up with. Of course, all this is my IMHO and no more.
1. If a unit of time the amount of currency to sell equals the amount of the same currency to buy, then the price does not change. Buyers and sellers satisfy each other.
2. The price moves, as we know, because of the difference in supply and demand. More demand for a currency makes that currency more expensive and vice versa.
3 The current price is the price of the last transaction, NOT the unmet demand hanging over the market.
4. Situation:
The EUR/USD price reaches a level of 1,4000 pips. At this level, the total bid is, let us say, 500 million EUR. The Bid on the level of 1.4010 pips is equal to, let us assume, 1 billion Euro. The Bid on the level of 1.4015 is, let us suppose, equal to 450 million EUR. The next bid is, let's say, at the 1.4020 level in the amount of, let's say, 350 million EUR. It does not matter how these bids are formed, through sell-bids of other market participants, through their stop-losses, through their market sell orders, the main thing that they are there and that between them (for simpler things) no other bids (that is, offers of Euro) are present.
Let's assume that at the level of 1.4000 a large bank enters the market with a long position (i.e., buys the Euro). In one order! He wants to buy, say, 2 billion Euros. To simplify the situation, let us assume that at that moment there is no other demand for the Euro. The bank has $2.8 billion for the operation.
What happens at this point? This seems to me to be the most interesting and this is, in my opinion, the question of the author of this article.
It seems to me so:
At 1,4000, the market satisfies the bank's demand for 500 million euros. The bank accordingly spends 700 million dollars. In that thousandth of a second, nothing changes. The price is in the same place.
What happens in the next thousandth of a second. The bid at 1.4000 is gone, but the bank still has ($2.8 billion - $700 million) $2.1 billion left over for which it wants to buy the euro.
The next bid is only for 1.4010, amounting to 1 billion Euro. For that, the bank needs 1.401 billion respectively and has it (in this order). The price soars to the 1.4010 level. The bank gets €1bn, having spent $1.401bn on it. The bank now has €1.5 billion and another ($2.1 billion - $1.401 billion) $699 million in the balance. The price is still at 1.4010. The bank's interest is to buy another 500 million euros.
In the next moment, the price goes up to 1.4015 where the bank buys 450 million Euro for $630,675,000. The bank now has 1.95 billion Euros and a balance of (699mn - 630,675,000) $68,325,000.
The next bid is at 1.4020 in the amount of €350m. For $68,325,000 the bank can now only buy €48,773,951. Which it does. The bank spends all the dollars and ends up buying 1,998,773,951 Euros. Instead of 2 billion, as it would have been if there had been a total bid of 2 billion or more Euros at 1.4000. That is, the bank's order was executed at different market prices.
In the meantime, when the bank spent the last dollars and bought the last Euro, the price reached 1.4020, after which a Euro offer of (350 mn - 48 773 951) 301 226 049 Euro was formed at this level in a thousandth of a second. The last transaction price is 1.4020 so the price stays there, unmet demand does not move it. Supply of the Euro is waiting for demand for the Euro. As soon as the demand appears near 1.4020, the price will move down or stay in the same place if they are the same.
And so on. But it all happens in fractions of a second in EBS, D2, etc., and of course, the number of deals and liquidity is much bigger and higher than in the above example.
This is how I understand it.
The forum thread 'Pricing', there is more detail and a list of books there:
https://forum.mql4.com/ru/20823/page4
it will go up tenfold as there are ten times as many buyers.
and the banks' behaviour is as follows: they know (can learn) that at the price of 1.2 there are lots of stop orders, i.e., when this price is reached, the demand for currency will increase sharply, but there is not enough 5 points to reach this price. The bank (or several banks) starts to increase the demand by sending buy requests in order to push the price up, but at the price of 1.3 they put a large sell order, i.e. the supply exceeds the demand and the price goes down.
It could also be that:
banks do nothing, and when a critical number of sell volumes are accumulated, for example, the banks pour in
knowingly large volume to buy and small participant's depo gets zeroed out, and the others trigger Stops and they
of course they lose their expected profit - on losses.
It's exactly the opposite. The more you buy - the lower the price goes : )
Are you sure, I've never actually been interested in this issue, is that for sure???
I just want to ask people who know about it, I see you can explain how it happens, can you enlighten how you can always buy at a better price, it just doesn't add up?
Are you sure, I've never been interested in this question,
just want to ask people who know about it, I see you can explain how it happens, can you enlighten how you can always buy at the best price just no way?
Everything is just the other way round. The more you buy, the lower the price goes.)
It's true!
It's worth buying, and it's going right down!
Or sell, and it goes straight up!
No deposit is enough for her! : 0))
Are you sure, I've never been interested in this question,
I just want to ask people who know about it, I see you can explain how it happens, can you enlighten how you can always buy at the best price just no way to get it?
)))) I'll have to read it, I'm a bit behind the times...
;)