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Neoliberalism
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May 28, 2017, 11:11:33 PM
 #1

How is the price of the securities determined on the exchange? Be it cryptocurrency, stocks or any other financial instrument.

They say it is simply supply and demand. If the demand is higher than supply than the price rises.

But what I dont understand is if for every transaction there are two sides than how do you determine which will pull the price?

Is it the order book and nonprocessed orders? Than fake orders may effect the price...

Can somebody explain it to me like I'm a dog.
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May 29, 2017, 04:36:11 AM
 #2

Imagine this:
in a market there are 10 sellers and 5 buyers.
the 10 sellers have to compete with each other to sell their btc.
because each btc is the same and the buyers dont care about who they get their btc from, the sellers have to lower their price to be competitive and attract buyers.
Buyers buy from the seller offering the lowest price because we assume that they are rational.
the price of the last transaction is what the market prices is. more sellers=more competition=lower prices.

now lets say that prices have dropped significantly.
5 of the 10 sellers think that the price is lower than what they think BTC is worth and want to buy BTC.
there are now 10 buyers and 5 sellers.
the buyers are now competing with each other to offer the most attractive price to the sellers, which is a higher price.
this now drives the prices up.

of course its a little more complicated than that but its the basics of how it goes. hope this helps.
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May 29, 2017, 04:38:36 AM
 #3

Imagine this:
in a market there are 10 sellers and 5 buyers.
the 10 sellers have to compete with each other to sell their btc.
because each btc is the same and the buyers dont care about who they get their btc from, the sellers have to lower their price to be competitive and attract buyers.
Buyers buy from the seller offering the lowest price because we assume that they are rational.
the price of the last transaction is what the market prices is. more sellers=more competition=lower prices.

now lets say that prices have dropped significantly.
5 of the 10 sellers think that the price is lower than what they think BTC is worth and want to buy BTC.
there are now 10 buyers and 5 sellers.
the buyers are now competing with each other to offer the most attractive price to the sellers, which is a higher price.
this now drives the prices up.

of course its a little more complicated than that but its the basics of how it goes. hope this helps.

Nice explanation! You didnt' consider the fact that buyers and sellers are trying to enact transactions of different sizes, but other than that, this is pretty much how it works.
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May 29, 2017, 04:56:45 AM
 #4

How is the price of the securities determined on the exchange? Be it cryptocurrency, stocks or any other financial instrument.

They say it is simply supply and demand. If the demand is higher than supply than the price rises.

But what I dont understand is if for every transaction there are two sides than how do you determine which will pull the price?

Is it the order book and nonprocessed orders? Than fake orders may effect the price...

Can somebody explain it to me like I'm a dog.
Totally simple but big question . In this world all things are available in small and big amount and that specifying the price of that thing .
Here in the beginning the price of the Bitcoin was 1$ in the starting but as the people involved in this  continuously , the price is also increases because the Bitcoin is limited in the market to 21 millions and I think about 60% are only mined .
So this is making the price increasing according to small up and down in the demand in the internet market .
Since the price in the world remain about at average to the price at every place also remain maintain ( can fluctuate small from country to country ) .
So here you should not think about this problem and make use of it without any risk  and fake price thinking , because everything is good and trusted among the people , that is why the people are using it .


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italianMiner72
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May 29, 2017, 08:56:00 AM
 #5

How is the price of the securities determined on the exchange? Be it cryptocurrency, stocks or any other financial instrument.

They say it is simply supply and demand. If the demand is higher than supply than the price rises.

But what I dont understand is if for every transaction there are two sides than how do you determine which will pull the price?

Is it the order book and nonprocessed orders? Than fake orders may effect the price...

Can somebody explain it to me like I'm a dog.

fake order may not affect price.
But fake orders can  affect traders mind, who take decisions.
After take a decision, they place orders and yes, this affect the price.
this is why big sell/buy wall appear and disappear many times over books, and rarely orders are all filled!!!

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May 29, 2017, 09:27:14 PM
 #6

Imagine this:
in a market there are 10 sellers and 5 buyers.
the 10 sellers have to compete with each other to sell their btc.
because each btc is the same and the buyers dont care about who they get their btc from, the sellers have to lower their price to be competitive and attract buyers.
Buyers buy from the seller offering the lowest price because we assume that they are rational.
the price of the last transaction is what the market prices is. more sellers=more competition=lower prices.

now lets say that prices have dropped significantly.
5 of the 10 sellers think that the price is lower than what they think BTC is worth and want to buy BTC.
there are now 10 buyers and 5 sellers.
the buyers are now competing with each other to offer the most attractive price to the sellers, which is a higher price.
this now drives the prices up.

of course its a little more complicated than that but its the basics of how it goes. hope this helps.

Nice explanation! You didnt' consider the fact that buyers and sellers are trying to enact transactions of different sizes, but other than that, this is pretty much how it works.
I will support this one,  this statement is very clear that that this things buyers and sellers will no longer get confuse on how to get their buyer or sellers. Though we know that not all exchange are having the same price of bitcoin.

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May 29, 2017, 09:45:39 PM
 #7

Don't look at an exchange like a collection of people buying and selling at a set price.  Look at it more like a negotiation.  If the demand rises, then the number of people hoping to buy has increased relative to the amount of people who want to sell.  However, because of this supply has failed to match demand.  Therefore the price rises to "negotiate" with the sellers - like, we will only sell to you if you agree to pay more for our Bitcoin.  This competition weeds out buyers that are not willing to pay more until a price has been reached where the bought and sold Bitcoin reaches an equilibrium.  

Therefore, the supply and demand change, and the Bitcoin price adjusts to adjust the supply and demand and make sure that there is an equal amount of Bitcoin bought to the amount that is sold.

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May 30, 2017, 06:45:32 AM
 #8

If you look at the  "price on the exchange as a vote and not as the forces of demand and supply negotiations  then you have not understand how trade work. The first stage that determines an asset price movement is " accumulation" at this stage people buying at a discount price and  when the volume of people buying at the discount price increases the prices for it exchange increased and vice versa.


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May 30, 2017, 08:11:16 AM
 #9

Initial prices or first day prices are being determined by what is the actual business/concept/ market capitalization/number of units. Later on supply and demand finalizing things.

If you are having highly innovative concept, you may start your listing with very big prices. Then people will decide whether it needs to go up or down based on application of your concept.

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May 30, 2017, 08:30:02 PM
 #10

If you look at the  "price on the exchange as a vote and not as the forces of demand and supply negotiations  then you have not understand how trade work. The first stage that determines an asset price movement is " accumulation" at this stage people buying at a discount price and  when the volume of people buying at the discount price increases the prices for it exchange increased and vice versa.
to me i think that the different exchanges have different strategies. they do not concern with each other. the price are different exchanges, which is really making people confused, i think bitcoin price should have same value in every exchange, which will finish the confusion about the price of bitcoin in different exchanes.

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November 16, 2017, 01:04:22 PM
 #11

supply and demand change, and Bitcoin prices are adjusted to match supply and demand and ensure the same amount of Bitcoin is purchased with the amount sold.

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November 16, 2017, 01:21:21 PM
 #12

Fake order can manipulate inexperienced traders to panic and sell or buy. This could enchain a wave of buying or selling and affect the price.

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