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tatupu70
2015 Oct 11, 3:59pm
No they perfom a different (but similar in the abstract) function. They buy and sell, providing additional supply and demand for the purposes of providing depth to the market, providing a price discovery mechanism that usually decreases volatility, that is compared to what would happen if a big seller brought a lot of contracts to market and had to wait for buyers without having any sense of how low he would have to go in price, and increasing the likelihood of fear or panic causing him to sell too low rather than being patient, when he doesn't know how many buyers are there.
Yes, we've been over that already. You think they add liquidity to the market. I say studies have shown that the value is greatly overrated as they add zero liquidity when it is needed most.
You make assertions about these aspects of markets which have a long history of existing and working without any evidence that you have done any real research into what I'm even talking about. I really do feel that it's worthwhile to explore the opposing view, maybe do at least a little homework, before making blind assertions.
I understand that concepts such as this are maybe even too much too take in, if you aren't really interested in understanding how markets work, so I'll leave it here.
OK, Marcus. Let me see if I can sum up the arguments that I am too stupid to take in:
1. It's always been done this way.
2. It adds liquidity to the market.
If and when you want to have an adult conversation, let me know. I can assure you that I understand anything you can post here. I may not agree, but don't misunderstand disagreement for misunderstanding. You can dispense with appeal to authority logical fallacies too.
Give it a try Marcus.
marcus
2015 Oct 11, 4:31pm
I say studies have shown that the value is greatly overrated as they add zero liquidity when it is needed most.
You don't even understand what you are saying here. IF a price is clearly way too high, and everyone finds out the value is way different at a given moment, a given second then of course expecting people to step in and buy at that moment is asking way too much.
Logic flaw: If speculators don't add liquidity when it is needed most (for example at the very second when extreme market moving news is coming out), then therefor they don't add liquidity the rest of the time ?
This is beyond stupid.
I would love to see your study, but won't hold my breath. . Maybe your study was one of those bullshit studies out there that have only one purpose, to back up the agenda of some mindless liberal that thinks that because of their powers of magical thinking, they know what works better than systems that are in place and working.
Statistics aren't alway used to lie. And it's not true that all researchers are mindless assholes with an agenda. But it does happen every now and then.
OK, Marcus. Let me see if I can sum up the arguments that I am too stupid to take in:
1. It's always been done this way.
2. It adds liquidity to the market.
Where does this fit in ?
providing a price discovery mechanism that usually decreases volatility, that is compared to what would happen if a big seller brought a lot of contracts to market and had to wait for buyers without having any sense of how low he would have to go in price, and increasing the likelihood of fear or panic causing him to sell too low rather than being patient, when he doesn't know how many buyers are there.
or this ?
On the most simplistic level, speculators help keep markets honest. Trust me, given a chance if people say on the sell side of some commodity market thought they could rig the market in any way to make the price artificially high when they are selling, they would. But in order to do that, they need someone to bid the price up. IF there is no supply there to sell to this guy who is trying to move the price up to a fake level, he can do it easily. But if informed speculators are there to sell to this cheater - because they know that before long the supply will be there and the price will be lower, then now it becomes too risky, and even a losing proposition to try to bid the price up to a fake level.
I can assure you that I understand anything you can post here. I may not agree, but don't misunderstand disagreement for misunderstanding.
If and when you want to have an adult conversation, let me know.
No, I'm done. You've proven where you are at on this and where you're going to stay. What I wrote in argument with you was for the benefit of others, or perhaps myself. I have no illusions about what it is you wish to be true, or about the magnitude, depth and breadth what you are closed to learning on this subject.
tatupu70
2015 Oct 11, 5:08pm
You don't even understand what you are saying here. IF a price is clearly way too high, and everyone finds out the value is way different at a given moment, a given second then of course expecting people to step in and buy at that moment is asking way too much.
Of course I understand. Market makers buy and sell when there are already many buyer and sellers available. At time periods when buyers or sellers are absent, market makers do not buy or sell either. They're in the market when not needed, and out of the market when needed.
Logic flaw: If speculators don't add liquidity when it is needed most (for example at the very second when extreme market moving news is coming out), then therefor they don't add liquidity the rest of the time ?
Except that's not what I said. I said they add liquidity when it's not needed. Not that they don't add liquidity.
providing a price discovery mechanism that usually decreases volatility, that is compared to what would happen if a big seller brought a lot of contracts to market and had to wait for buyers without having any sense of how low he would have to go in price, and increasing the likelihood of fear or panic causing him to sell too low rather than being patient, when he doesn't know how many buyers are there.
That is basically the definition of adding liquidity. If you don't even know the definition of basic terms, how can you think you know more than anyone on the subject.
On the most simplistic level, speculators help keep markets honest. Trust me, given a chance if people say on the sell side of some commodity market thought they could rig the market in any way to make the price artificially high when they are selling, they would. But in order to do that, they need someone to bid the price up. IF there is no supply there to sell to this guy who is trying to move the price up to a fake level, he can do it easily. But if informed speculators are there to sell to this cheater - because they know that before long the supply will be there and the price will be lower, then now it becomes too risky, and even a losing proposition to try to bid the price up to a fake level.
Same argument. It's liquidity.
Here's one study for you:
http://www.jstor.org/stable/25656291?seq=1#page_scan_tab_contents
marcus
2015 Oct 11, 7:27pm
Here's one study for you:
http://www.jstor.org/stable/25656291?seq=1#page_scan_tab_contents
And the inferences you make or conclusions you draw from this abstract, that are relevant to our disagreement here, are ?
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