WARNING, this post doesn’t have any pictures or memes. I’m sorry, but also, fuck you.
In stocks and with other equities traded and other publicly interested securities, many traders make their bones by trying to find the ‘true value’ of a good or service. Knowing this value, they then try to simply buy lower and sell higher, or sell higher and buy lower. Either catch and throw, or throw and catch; if you know what I’m saying.
Either or, there is great money to be made by making an educated guess as to what the ‘true value’ of a given price of good or service is. Of course, we’ll never know the true value, but neither will anyone else.
So we speculate as to what that value is, buy undervalued goods, sell overvalued goods. This is the nature of trading and mercantilism. If guessed correctly, it pays off, and can pay well.
How this relates to the Markets,
Well, in today’s age, we have market makers who provide a ‘derivative variable’ demand, that variable is called ‘liquidity’. We even have programs and extra ‘pools’ called ‘supplemental liquidity programs/pools’ to provide such liquidity. All of this to ‘supply’ the market so that trade can occur.
Basically a market maker’s “job” is to provide liquidity. To be the middle man and take the trades to make more trades happen.
And liquidity is one of the momentum forces that push and pull at price. Price being the ‘publicly displayed value’.
How to use liquidity,
If you see a high and strong buy side, the demand is high. The price naturally goes up.
You can throttle liquidity to be dry, moderate, or be very wet. Changing the amount of supply at a given price.
When things are dry and in high demand, price goes up very easily. When things are wet and in high demand, price stays relatively the same.
So, for a given volume of trades, if there isn’t a lot of supply, then the price naturally goes up until satisfied. Thus volatility, movement, and momentum are tied to the direction of the buy pressure and the supply of liquidity.
Now the same thing happens on the sell side,
If you see a high and strong sell side, the demand (to sell) is high. It’s a bit different, but sell pressure in trading is not the same as supply.
The more sellers or the more being sold doesn’t mean that there is more supply, especially when some sellers sell vaporware or phantom shares.
This is a bit side track, but basically sell and buy are both demands. Supply is the actual goods and services, and it’s throttled to be served as ‘liquidity’. So buy side and sell side are demands, the demand to buy, and the demand to sell.
It’s a common misconception to conflate sell pressure with supply, so don’t feel dumb, you should feel smart, because now you know better than the commons by simply knowing that.
More demand to sell, less demand to buy, then the price naturally goes up. You can throttle liquidity to be dry, moderate, or be very wet. When things are dry and in high demand, price goes up very easily. When things are wet and in high demand, price stays relatively the same.
Liquidity is a way to effect supply, and if you can alter supply, you can turn/curb the momentum of the buy side and sell side, resulting in less buy pressure, and inevitably more sell pressure.
Essentially, if you want the price to go up, limit supply or liquidity when there are more buyers than sellers. This raises buy pressure. When there are more sellers and sell pressure, add more supply and liquidity to reduce sell pressure, thus allowing the buy pressure to match.
And for whatever reason ‘people seek stability in a volatile market’, so the longer a price holds at a certain point. The stability will generally introduce the opposite direction type momentum traders. So if the sell pressure is reduced to provide price stability, a few more buyers might think that this is the turn around, and they jump in. This of course, is a very simplistic view of trading, and it doesn’t include dream-work traders or divination users, lmao.
Of course, this strategy doesn’t work if a group of meme stock trading retailers decide to supply their own liquidity and directly register the stock of shares in their name and away from the markets that the liquidity supplier or market maker controls. Thus creating a huge buy side pressure and drying up the liquidity provided, resulting in a large amount of nontransparent short positions having to close resulting in the Mother of all Short Squeezes. Of Course that won’t happen if the shorts closed their positions, but why would the powers that be want to suppress price? Unless they stand to lose a fuck-ton of money from an upward Moon shot. But I digress.
A Banana Analogy
Liquidity is a way to effect supply, and if you can alter supply, you can turn the momentum of the buy side and sell side, resulting in less buy pressure, and inevitably more sell pressure.
So if a bunch of apes start buying bananas and the price keeps going up from $5 to $10 a banana, you as the market maker (the glorified middleman between apes and banana seller) can either;
- Reduce supply and make the price sky rocket resulting in fewer bananas for people, more money for the banana sellers.
- Increase supply and let the apes enjoy bananas, while a more number of banana sellers get a smaller share. But more of the banana sellers can be satisified with this sort of ‘price fixing’.
Well, you don’t have any skin in the game, so you don’t profit by helping one side. . .
. . . Unless you also have skin in the game and profit from the banana sellers.
If you did profit from the banana sellers, then now you have an interest to find the best point in which the banana sellers make the most money. Fuck those dirty apes, you care about your interests, which is cold hard cash. This thereby having a system that favors the profitable side of the trades.
That’s the problem with market makers and regulators, it boils down to a conflict of interest, money, and greed. (which are all related but still different things).
And of course, in real markets, people don’t simply trade perishable goods with relatively low resale value like a banana. No, people trade non perishable equities that they can’t even eat, silly paper, fucking retards.
Anyways, in these markets, the Market Maker can also take sides with buyer or seller, they can profit from both. So now there’s a conflict of interest in either direction depending on how the financial backroom deals work. That’s assuming, of course, that there are financial backroom deals.
It’s like a banana republic, but instead of governance, it’s about financial markets. So a banana market.
“The United States Financial System is a Banana Market”
-(You can quote me on that)
So if you control liquidity, then you control the direction of price. As “volume is king”, so does liquidity become that of the thing that ‘fixes the price’.
Liquidity becomes a steering wheel to direct price.
Liquidity is a variable of indirect “derivation” of true value. Because Price is publicly displayed value, and true value is a metaphysical and ideal concept that Price tries to become in all of Price’s potentiality.
If True value was an essence of the gods, then liquidity control is a usurpation of nature and a means to Become as Gods. But that would require financial metaphysical discussions, and I don’t have the time of day to lecture you on something I just made up. (Seeing as I’m already doing that).
Also Supply and demand graphs are technically not accurate and all of economics is based on a relationship that shouldn’t be plotted as a ‘basics of economics’. That shit is like teaching calculus when people haven’t figured out algebra, so most of economics is built on false assumptions and falsehoods.
Since I mentioned economics a few times, let’s be clear, economics is made up and a good chunk of people studying it are in a world of la-la land. Theory without experience and/or spirituality. It’s really shit in my estimations. Let me explain,
Plotting supply and demand is like plotting space and time, which we also do in cartesian math, but we don’t use time to find space nor space to find time (unless limited to 2d constraints and finding a plot point in said constraints). Point is, it’s retarded.
A 2D Space vs. Time graph doesn’t mean much when Space itself is more than one dimension. Plotting space and time in a 2D graph, means that space has one dimension, and time has another dimension. Hence 2D, there’s two dimensions. (Also, if you want to be technical, Time itself is more than one dimension, so using one plot to plot time also is limited).
Without specific context, you couldn’t find out the space of a Car, which is atleast 3 dimensional, with a one dimensional axis on a graph.
I mean, yes, you could use a one dimensional tape measure to measure the car three times to get it’s height, width, and depth. But you can’t do that with a graph plotted against time. (A tape measure used on a car three times, would create an X, Y, and Z graph in which all dimensions are space).
So plotting supply and demand is as retarded as;
measuring the spatial dimensions of a car with a stop watch.
Like you’d have to be way smarter than most geniuses to actually measure the car with a fucking stop watch. And if you’re now learning about Demand vs. Demand, then you probably don’t fit the cut off scores for genius-hood or whatever-the-fuck.
When really, you should be plotting space and space, or demand vs. demand to aim towards specific results. While we’re at it, Supply should be measured with other supplies, instead of being lumped with demand.
So the ‘true’ teachings of “demand side economics” doesn’t look at a Supply vs. Demand relationship, but instead it’s a battalion orgy of Demands fighting other Demands in a Highlander-esque fight to become the supreme winning demand. Demand being a caricature of the metaphysical value of desire in kinetic form; and then Supply would be a potentiality of fulfilling demands. Of course, that’s if you subscribe to my prescribed scribblings that are scribed on the internet as I talk shit towards, at, and down to basically ‘all of economics’.
So, this is a small note saying (basically) economics is all (if not most) fucked and wrong, and I hate economists. Just like how hating race makes you racist; I hate economies too, so that makes me an economist. Thus I can conclude from this detour rant that;
I Hate Myself
These are the basics,
So inherently, due to having bonafide official liquidity providers, for as long as the market makers can determine the liquidity that goes into or out of the markets, then you do not have true value.
You have a synthetic value.
You have a fake Price.
And this value can be manipulated by the market makers and algorithms to trade off of.
Through the use of the ‘Steering wheel of liquidity’. (Which is one method, one control mechanism for the overall synthetic price. There’s many more out there besides just liquidity.)
This simply means that the Price is Wrong and is not reflective of True Price.
And if you take it further out,
There are many types of liquidity suppliers beyond the Market Makers of Financial equities markets.
I’m talking about the supply, demand and also more demand, of even paper backed securities.
Like US Dollars, the Fed Reserve is basically a sanctioned money printer or authorized counterfeiter that can control the liquidity of the US Dollar baby. Especially since we’ve departed from the gold standard, and being the world power ourselves, we don’t really have people telling us ‘no’. As evidenced by the nearly doubling the money supply by printing about 40% of all currency in the last five years. Oh, we also removed M1, M2, M0, and M3 money supply metrics, that way we can cook the books more brazenly.
Which means they can affect the price and synthetic value of the US Dollar to keep it afloat or tank it.
Why would they tank it? Idk, you’d have to ask those countries that pegged to the US Dollar, got floated, and got bought up cheaper than a used Thailand
hooker on sale.
Yes, I mean literally the country of Thailand,
that was one of the countries that the globo-oh-no banks bought up
after a speculatory attack when they floated the Thai Baht in 97′.
Which, if you think about it, economic policies and edicts that control interest rates also control the liquidity supply and synthetic value of goods via inflation and deflation resulting in an economic war of attrition between nation states. But that’s assuming that we’re in a zero-sum game OR that people are treating the possibly-infinite universe as a zero-sum game, lmao.
Here’s a quote;
“[Those] Who controls interest rates, controls the monetary policy of Europe, controls the politics of Europe.”- Margaret Thatcher quoted by Yanis Varoufakis quoted by me loosely
And this other quote, an oldie but a goodie;
“If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered.” -Thomas Jefferson
I highlighted Conquered because I find it badass that our founding fathers would boldly claim such a truth. It’s super based in my opinion.
I’m not here to rant about Fed Bois and go on a Fed pill anti-globo-oh-no talk. I’m just here to say that as long as we have manipulators that put out fake synthetic value for the world to see, then the price does not reflect true value.
The Price is Wrong.
I mean, the world is wrong too, but that’s a topic for another day.
*insert Sheesh sound effect*
Do we need market makers? Does True value (and by extension, true price) matter? Does Monetary policy drive both fiscal and economic doctrines? Do we need the Federal Reserve? Do we need any centralized banking instituted tied to clandestine global hegemony? Do we need to give me tequila shots?
These are all asking questions that grasps at straws. They’re philosophical in nature, and I can’t seem to answer yes nor no. Even Tequila, is it worth drinking? Or should I hold my liquor- in my hand- and two in the bush or something. I don’t know -proverbs-.
Economics is retarded because they’re not going to teach you how to make real money. That would be dumb on their part. Besides the fact that the concept of ‘real’ applied to ‘money’ is also up for philosophical debate. What kind of swindler would teach their Mark that they’re being swindled?
Who cares to know?
*Not Valid Financial, Legal, Life, or Any Advice
There could be a philosophical level discussion about manipulation being a part of the market mechanics.
But that’s not something we can reasonably talk about at great lengths when the disparity for such a systemic view of things being rationalized isn’t able to count for the benefits. Mainly because we have no way of tracking or knowing, of either the good nor the bad, so we can’t really say. We can only theorize.
The discussion of market manipulation being a natural part of the market would be akin to human beings being natural themselves, and that technology and buildings and all of our tools are also a natural byproduct of our human nature. The idea of ‘man vs. nature’ is then a constructed perspective bounded on illusions. Which would imply that man’s interactions with the markets includes playing fair and also cheating.
Arguably, if everyone’s “in on the cheating”, perhaps the cheating is the correct version of “fair”. If everyone is playing the game by cheating, perhaps the true game is in the cheating.
As a second point, the word ‘wrong’ is bounded on ideas and concepts of righteousness and dualistic thinking, which is kind of gross. I mean, when someone does good, we could ask ‘good for whom?’ and if someone does ‘bad’, ‘bad in what way?’ type shit. Which boils down to arguing over semantics. . . If you really think about it, all arguments are arguments over semantics. A battle of meaning, so to speak.
So this shit post is only rational to the level of idk, Sub-tier 5 thinkers that think for the betterment of society or some shit. It’s a tiered system that I (just now) made up and promptly refuse to explain, so you’ll just have to use your own imagination.
I guess, it depends on what level of thinking and spirituality you entertain, to prescribe a ‘good’ or ‘bad’ or ‘right’ or ‘wrong’ to something. But we’re talking about the world of finance, and most spirituality wrongly rejects finance and money. So in my calculations, spirituality is the one in the wrong when in the world of finance.