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Hello, starting with the basics, I would like to understand how the market works: Is it true that for some to win you have to lose others? Why does a price go up or down? And the technical parts of execution: How does an order work? What filters does it pass? Do you go directly to the market? Thank you

1 Answer


The concept that the market is a zero-sum game is real, but the participants are so broad that it is not restricted only to private and institutional traders or investors. The companies themselves and unfortunately even some central banks also participate in this market. Prices rise when buying interest exceeds selling interest. When demand is greater than supply, the price rises and vice versa. The reasons why people want to buy or sell are constantly changing. But it is always affected by the prevailing sentiment in the market. When the sentiment is positive, the perception of future increases attracts money to risky assets such as the Stock Market, leaving other assets: bonds, liquidity, deposits, etc. When the feeling is negative,

The orders you place can go to the market directly or they can be kept by the market maker. That is, a broker may want to give you a counterpart to one of your orders in which case he takes the opposite position to yours. Apparently that order does not enter the market but it exists. If you are doing well and the broker is doing poorly, there will be a time when the broker wants to close it on a stop and then it will execute the same in the market, so your order finally comes to be reflected in the price. The "market-makers" are entities that constantly provide liquidity, allowing the difference between demand and supply to be smaller. Traders of this type will only take your order if they like the opposite strategy to yours and if they don't pass it directly to the trading venue.

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