Intra-day Trading
Discussion
s1962a said:
At what point of the day would you 'execute' the trade, and when would the price be set?
(I should point out this was not my idea, but a colleagues)not too sure; execute at any point of the day and price set at end. basically so you could trade at any point through out the day, but the price is only updated at one point in the day
I understand it's not your idea 
The current model works on a demand and supply basis and the 'order book' of the trading exchange, and is meant to reflect the change in price as buyers and sellers are matched. How could they do this if you were only trading once a day, and at what price would you buy and sell? There would have to be a 'spread' between the selling and asking price - how would that be determined?
The current model works on a demand and supply basis and the 'order book' of the trading exchange, and is meant to reflect the change in price as buyers and sellers are matched. How could they do this if you were only trading once a day, and at what price would you buy and sell? There would have to be a 'spread' between the selling and asking price - how would that be determined?
One price a day already exists....funds
In theory I suppose you could trade Shares, bonds currency and all their derivities in one hectic five minute session.
I've only given this a few seconds thought but I see a spread problem as market makers have defend themselves from swings in five minute sessions around the world while they are "closed"
Efbe said:
(I should point out this was not my idea, but a colleagues)
not too sure; execute at any point of the day and price set at end. basically so you could trade at any point through out the day, but the price is only updated at one point in the day
Simple example. You have shares in Northern Rock and you think things are going down the pan. You want to sell you shares at 9am. At 12am there a queues outside every branch. At 2pm I decide to sell all my shares. What price do you get? What price do I get?not too sure; execute at any point of the day and price set at end. basically so you could trade at any point through out the day, but the price is only updated at one point in the day
Markets are fluid things with constantly changing prices which react to real time information. Think of it like live sports betting. You can bet on a football match before or during the game. 4-0 down at half time the odds of winning are really low but there are still odds.
Hoofy said:
What is the purpose? To stop "gambling"? To stop wild market fluctuations? To allow traders to get up at 3pm for 5 minutes' work and still earn the same amount of money/bonus?
to stop the first two.afaik a lot of the trading is done by computer algorythms, setting limits at which to buy/sell.
If once a day trading rather than intra-day wouldn't stop wild fluctionations, gambling, shortselling etc then it would have no point.
My question of it is that would it just create selling between companies rather through the exchange.
Bing o said:
I for one appreciate the work you do in the infant schools.
You would hate to know where I work!The reason I have posted this is becuase I wasn't able to give a quick answer as to why this wouldn't help, However I am also not close to any of this trading in my daily life.
R11ysf said:
Simple example. You have shares in Northern Rock and you think things are going down the pan. You want to sell you shares at 9am. At 12am there a queues outside every branch. At 2pm I decide to sell all my shares. What price do you get? What price do I get?
Markets are fluid things with constantly changing prices which react to real time information. Think of it like live sports betting. You can bet on a football match before or during the game. 4-0 down at half time the odds of winning are really low but there are still odds.
good answer. but then shouldn't trading be 24/7?Markets are fluid things with constantly changing prices which react to real time information. Think of it like live sports betting. You can bet on a football match before or during the game. 4-0 down at half time the odds of winning are really low but there are still odds.
Surely the default answer is that intra-day trading provides liquidity? There is always someone willing to purchase your shares and always someone willing to sell you something you want to purchase, even for small companies.
If you force investors to invest for the long-term then you make the market far less liquid than it naturally wants to be. Without people constantly buying or selling it's possible you won't be able to offload your shares (or convert your investment into cash) exactly when you need to. This makes the whole thing a lot less attractive and would probably damage the market (and therefore the businesses that raise capital via these markets).
If you force investors to invest for the long-term then you make the market far less liquid than it naturally wants to be. Without people constantly buying or selling it's possible you won't be able to offload your shares (or convert your investment into cash) exactly when you need to. This makes the whole thing a lot less attractive and would probably damage the market (and therefore the businesses that raise capital via these markets).
Efbe said:
good answer. but then shouldn't trading be 24/7?
A lot of markets are 23 hours a day e.g. currencies. You need a 1 hour close to settle up the accounts.You mention in your post above to stop "gambling, short-selling etc" but as you say above you don't work in the industry and as such I don't thing you appreciate the valuable roles trading actually does. The way that modern society was constructed was on stable prices and this comes through trading.
Initially prices for food substances such as grain were sold in advance or a "future contract" and the exchanges were a joining of the farmers and the end user. However not all of the product being sold would necessarily have end users at that time so the traders would take on these contracts with the intention of selling them on in the future. They did this with their own money at risk and overall it smoothed out the price fluctuations and created stability over time.
The same can be said of short-selling. People complain that companies are short sold and can be ruined by reckless trading activity. In reality this is very rare and most companies that are sold short is because they are overpriced. You don't get many of the papers complaining when oil traders short sell oil and bring the pump prices down for petrol do you? There are certain words which the media has attributed to the "bad" pile and as such they get tarnished without their full meaning being understood.
Efbe said:
R11ysf said:
Simple example. You have shares in Northern Rock and you think things are going down the pan. You want to sell you shares at 9am. At 12am there a queues outside every branch. At 2pm I decide to sell all my shares. What price do you get? What price do I get?
Markets are fluid things with constantly changing prices which react to real time information. Think of it like live sports betting. You can bet on a football match before or during the game. 4-0 down at half time the odds of winning are really low but there are still odds.
good answer. but then shouldn't trading be 24/7?Markets are fluid things with constantly changing prices which react to real time information. Think of it like live sports betting. You can bet on a football match before or during the game. 4-0 down at half time the odds of winning are really low but there are still odds.
However I think the problem with 24/7 would be that traders would overwork themselves and never go home. A lot is done by computers, but the parameters which those computers use are still manual (like interpreting the news into a risk quotient).
Ozzie Osmond said:
^^^ This
Oooh, I see my old friend Mr FTSE closed at 5,945 today.
The financial gurus of PH say this has no relevance. My wallet says it's 15% fatter than it was 3 months ago. I know which I believe.
It's only a paper profit till you actually execute that trade, my friend!Oooh, I see my old friend Mr FTSE closed at 5,945 today.
The financial gurus of PH say this has no relevance. My wallet says it's 15% fatter than it was 3 months ago. I know which I believe.
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