Hello and welcome to another ACY securities educational video. My name is Alistair Schultz and I'll be your host through today's trading journey. Today I want to talk to you about what the market actually is.
Now, a lot of you might be sitting there going, I know what the market is. I look at a chart all the time and you'd be right. You are looking at the market, but I am looking at it from a factual. Perhaps it is fear and greed. Are you looking at it that you would just watching prices fluctuate back and forth? The reality of this is that the market is actually an auction. Go back to the older times before electronic trading and you would have had the open outcry of people in the trading pit waving tickets around in their hands and trying to bid for one another's prices or their products that they have at the time.
Really the only difference that we see is that instead of it being a tangible product like a house, is that we're dealing with something that is a little bit more intangible where you can't physically pick it up in most instances. Of course, in commodities, you can always ask for delivery, but it tends to be a little bit more expensive than we'd like to see and you can't always get that barrel of oil put in the living room. So a bit beyond that. When we look at the London Stock Exchange, it didn't move to electronic trading until 1986 and the most recent one was the New York Stock Exchange in 2007 all the way through this period we saw a conversion occurring. But the principles still stay the same behind the scenes of the chart that you see on your computer and behind the scenes of what we see in electronic trading today, it is still an auction at its core.
So who might be the participants? When we think about in the market, who is actually conducting trade, who is involved inside of it? The first one back in the older times would have been registered trade as brokerage firms, high net worth individuals and of course companies and institutions who might trade investment funds. Now back then you would've had to dock plot your daily prices. So you might see in the newspaper what the price of the Euro versus the Dollar would have occurred. And you'd Mark that out as a daily chart on a piece of graph paper. Obviously with electronic trading it's made it much simpler to get accessibility to these sort of things. Now the introduction of electronic trading has improved that accessibility so much that even you are able to trade today. So what is it the traders are really saying? If we know that it's kind of an auction, then we have to assume some level of supply and demand is occurring.
So in reality, if there are more buyers and sellers, demand will be higher and the price will rise. Now if there are more sellers than buyers, then the supply rises against that demand and the price will fall. So what are we as traders really seeing on the charts? The answer is we are seeing the change in price that is occurring because the changes in supply and demand, so whilst it is an auction it still has the same principles of supply and demand. Now if you guys want to do a little bit more research into this, what you want to look at it yourselves, I would suggest that you sort of look at the idea of understanding that supply and demand principle from something you already know quite well. So if you know stuff about real estate and the housing markets and you've been to auctions before, I suggest you look into that side of things if you want to sort of get those basic principles behind your trading into effect.
Now of course I'm hoping that you've learned today that the market is really an auction on a much larger scale and there is nothing really have changed behind that other than the adage of electronic trading. Now, of course, if you have any questions on the content that I have today or you just feel like sending a message, feel free to send a message to talk to owl@acy.com and of course, like I subscribed the video so you can get some more great content from me and ACY securities in the future. Have a good trading day ahead.
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