Discussion of article "Market Theory" - page 2
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The question has arisen. What can market theory be used for in ordinary commodity markets? The first thing that comes to mind is the calculation of the optimal selling price of goods. What else?
And such a question concerns the securities market.
You will agree that, on this market there was no slender market theory explaining the principles of price formation, the market price was presented as an average value of some values, profit was analysed only by formula (1), the influence of fixed and variable costs, purchase or production prices (cost price) of goods was explained vaguely by means of charts. The optimum selling price was set by everyone by experience. Now, I think, the task of finding the optimal mode of trade has become much simpler. The algorithm in automatic mode can constantly recalculate the value of the optimal price as fresh actual data is entered, depending on changes in the structure of fixed and variable costs, the purchase price of goods and other factors. The trading process can become more transparent. If similar methods of researching the trading process have been available in the past, can you give examples. I have dug through almost all sources, I have not come across similar tactics. The entrepreneur, now, can calculate:
1. the marginal price of buying a good for resale;
2. the marginal values of fixed and variable costs;
3. the optimal value of the selling price of the product;
4. the market demand for the given commodity (indirectly).
I cannot say anything about the securities market, as I have not conducted research in this direction. However, I am sure that the theory will cover this case as well. I will try to process the value of shares of companies available in MT4 terminal.
Agree that, in this market, there was no coherent market theory explaining the principles of price formation, the market price was presented as an average of some values, profit was analysed only by formula (1), the influence of fixed and variable costs, purchase or production prices (cost price) of goods was explained vaguely by means of charts. The optimum selling price was set by everyone by experience. Now, I think, the task of finding the optimal mode of trade has become much simpler. The algorithm in automatic mode can constantly recalculate the value of the optimal price as fresh actual data is entered, depending on changes in the structure of fixed and variable costs, the purchase price of goods and other factors. The trading process can become more transparent. If similar methods of researching the trading process have been available in the past, can you give examples. I have dug through almost all sources, I have not come across similar tactics. The entrepreneur, now, can calculate:
1. the marginal price of buying a good for resale;
2. the marginal values of fixed and variable costs;
3. the optimal value of the selling price of the product;
4. the market demand for the given commodity (indirectly).
I cannot say anything about the securities market, as I have not conducted research in this direction. However, I am sure that the theory will cover this case as well. I will try to process the value of shares of companies available in MT4 terminal.
And another question about application to forex (or to shares). Suppose the real purchase price is 1,00000. Does your theory show the optimal buy price that should be waited for?
Same thing about the selling price.
Thanks.
And another question about application to forex (or stocks). Let's say the real purchase price is 1,00000. Does your theory show the optimal buy price that should be waited for?
Same thing about the selling price.
Thank you.
Unfortunately, the forex market does not allow you to trade profitably at the optimal price level. As soon as you wait for such a state, when it is equal to the optimal level, this level will turn out to be not optimal, moreover, you will find yourself at the global break-even level. However, almost all serious trends start from this market condition. You need to wait for the current and market prices and the level of the optimal price to move. It is necessary to open in the direction of the optimal price movement. Now the price jump has just started from the global break-even point - from the level of optimal price or Lion level: https://www.mql5.com/en/charts/3838121/eurusd-m5-e-global-trade. В 19-30 19. 08 15g. all levels - current price Ts, market price P (red dotted line) were collected at the level of Tsopt (Lion level), even waited for the level of MA (red line) of the same period and only then, the current trend started. To this gathering, the levels were going for several hours. In these cases, you are right, we should wait for the price to return to the level of Tsopt.
The same thing probably happens with stocks. We have to analyse.
Unfortunately, the Forex market does not allow you to trade profitably at the optimal price level. As soon as you wait for such a state, when it is equal to the optimal level, this level will not be optimal, moreover, you will find yourself at the global break-even level. However, almost all serious trends start from this market condition. You need to wait for the current and market prices and the level of the optimal price to move. It is necessary to open in the direction of the optimal price movement. Now the price jump has just started from the global break-even point - from the level of optimal price or Lion level: https://www.mql5.com/en/charts/3838121/eurusd-m5-e-global-trade. В 19-30 19. 08 15g. all levels - current price C, market price P (red dotted line) were collected at the level of Copt (Lion level), even waited for the level of MA (red line) of the same period and only then, the current trend was started. To this gathering, the levels were going for several hours. In these cases, you are right, we should wait for the price to return to the level of Tsopt.
The same thing probably happens with stocks. We have to analyse it.
Are you going create an indicator with the logic? :)
Excelent idea.