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Microsoft Corporation Message Board

  • cfuryurself cfuryurself Apr 5, 2013 10:36 AM Flag

    The hole in low volume theory dumbed down hopefully to a level that hawcreek can grasp.

    [You really need to stop posting and read, you make a fool of yourself over and over when you try to defend the idiotic idea that if
    you can sell a single item at a high price that means there is a demand for 1000 such items at the same price. Only selling 1000
    confirms there is a demand for them at that price, but selling even 100 would more strongly indicate there is a valid demand.]

    Lets say there are 1000 market participants in the room and each has a basket of the items. At 10:00 AM they
    are trading for $20.00. The price is steady and the number of sales is small. At 11:47:30 News breaks that
    a storm in the Floriduh has destroyed a sizable portion of the same items. A few sales occur for around $30.00
    after the news as the group has collectively estimated the worth of the items higher. At 1:20:22 PM news hits
    that a company has an entire warehouse full of these items and a then there are a few sales around $22.00
    as the group collectively reevaluates the price.

    It would seem the price can change dramatically with few actual transactions when information is efficiently
    distributed.

    Low trading volume indicates agreement on price.
    High trading volume indicates disagreement on price.
    Exactly what can happens in computer traded markets.

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