On the unequal probability of a price move up or down - page 3
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EUR/GBP + 0.3 does not equal (EUR +0.3)/(GBP+0.3)
Thank you for your thoughtful question. "Provariate" means the following: imagine that over some time interval (located to the right of the price chunks shown on the time axis) the value of EN will change, in some way. By some value. Let us denote it by deltaEN. The value of PN will change by the same value, since, I draw your attention once again, the graphs of the euro and pound in relation to the quoted currency N are identical to a constant (one). Accordingly, I find the euro pound EURGBP as the ratio of euro to N and pound to N (EN in the numerator, PN in the denominator). Actually the value 0.3 is just an arbitrary value, one could take any other one. Even 0.1 or 0.5. Just a change that will happen sooner or later (how long it will take - does not matter, the only thing is that the magnitude of the change should be related to the EN itself, if it is about 5.5, it is strange to expect a change of 10 in the foreseeable future, it is still a relatively small change from the last known value).
Well, so I asked you what you meant by "failing the eurofcnt", you said "add an arbitrary value of 0.3 to its quotations".
And then you do NOT add 0.3 to EURFUNT Quotes, you add 0.3 to the numerator and denominator of a fraction - this is not the same thing.
and that's why you get different numbers
The direction of price movement is independent of probabilities. Everything is determined by supply and demand in the market, not by probabilities.
Well, so I asked you what you meant by "failing the eurofcnt", you said "add an arbitrary value of 0.3 to its quotations".
And then you do NOT add 0.3 to EURFUNT Quotes, you add 0.3 to the numerator and denominator of a fraction - this is not the same thing.
And that's why you get different numbers.
So correct the formula - if EURGBP is rising or falling, you should add 0.3 to its quotations, not in the numerator and denominator.
You have an arithmetical error and that is why you get different numbers.
It is the same difference in descriptions as between dynamics and kinematics. How motion is defined is unimportant for this consideration. What is important is that it exists. I can rephrase to make you feel more comfortable: supply and demand determine the probabilities of price movements up or down, such that they are never equal to 50%.
What a revelation. It is clear that for the price to start moving up or down, there must be an imbalance between supply and demand. And if the price moves somewhere (especially if it moves very fast) then of course the supply/demand ratio will be 50%. Again, probabilities have nothing to do with it.
Yes, of course. Strange that you would even think of a construction like EUR/GBP + 0.3. I can't think why you need it and what it has to do with what I've laid out. Are you using already? Happy New Year.
correctly he wrote
However, than answered your question in full
It is clear that for the price to start moving up or down, there must be an imbalance between supply and demand. And if the price is moving somewhere (especially if it is moving very fast) then of course the supply/demand ratio will not be 50%.
You have missed the most important word: never. It is argued that the probability of a price move up or down for any pair (except perhaps a pair with a specially constructed quote currency, but that is a separate topic) is never 50%, for any adequate delta value (up or down). And it is not just asserted as self-evident, but proven by simple reasoning involving coordinate transformations (quote currencies). If this is self-evident to you, congratulations, you are quite sane.
he wrote correctly
However, he did answer your question in full