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What we see is that actually trading bitcoins and ActualMoney affects the price way more than it does with Apple stock, because trading is way thinner - which i

What we see is that actually trading bitcoins and ActualMoney affects the price way more than it does with Apple stock, because trading is way thinner - which is the thing I actually said and which you're failing to address.

DennisP 9y ago
I guess I don't understand what you mean by "thinner," if it's something other than the percentage of the total which is traded each day.
- davidgerard 9y ago
  Trading jargon, sorry - it's a standard term. ==== Investopedia: Thin market http://www.investopedia.com/terms/t/thinmarket.asp http://www.investopedia.com/terms/t/thinmarket.asp A market with a low number of buyers and sellers. Since few transactions take place in a thin market, prices are often more volatile and assets are less liquid. The low number of bids and asks will also typically result in a larger spread between the two quotes. Also known as a "narrow market". A thin market has high price volatility and low liquidity. If supply or demand changes abruptly, resulting in more buyers than sellers or vice versa, there will typically be a material impact on prices. Since few bids and asks are quoted, potential buyers and sellers may find it difficult to transact in a thin market. ==== Applied to Bitcoin: if the market is thin, i.e. the order books aren't very deep, then a small amount of trades will strongly affect the price. So it's not a matter of what proportion of the total units a given trade is - but more of how busy trading is, and how likely a given trade is to strongly affect the price. In Bitcoin, single trades on the order of 100BTC can send the price up or down $30. (Note also that the quoted "price" is a weighted average of exchanges. The price has been observed going up or down when the blockchain was actually getting flooded with transaction spam, and non-spam transactions were near-impossible; this is because trading inside the exchanges didn't stop, even though it wasn't linked at all and you couldn't transmit bitcoins between them. So the number to worry about is not depth of all order books, but depth of the order book on each exchange.)
  - DennisP 9y ago
    That makes sense, thanks.

DennisP 9y ago

I guess I don't understand what you mean by "thinner," if it's something other than the percentage of the total which is traded each day.

davidgerard 9y ago
Trading jargon, sorry - it's a standard term. ==== Investopedia: Thin market http://www.investopedia.com/terms/t/thinmarket.asp http://www.investopedia.com/terms/t/thinmarket.asp A market with a low number of buyers and sellers. Since few transactions take place in a thin market, prices are often more volatile and assets are less liquid. The low number of bids and asks will also typically result in a larger spread between the two quotes. Also known as a "narrow market". A thin market has high price volatility and low liquidity. If supply or demand changes abruptly, resulting in more buyers than sellers or vice versa, there will typically be a material impact on prices. Since few bids and asks are quoted, potential buyers and sellers may find it difficult to transact in a thin market. ==== Applied to Bitcoin: if the market is thin, i.e. the order books aren't very deep, then a small amount of trades will strongly affect the price. So it's not a matter of what proportion of the total units a given trade is - but more of how busy trading is, and how likely a given trade is to strongly affect the price. In Bitcoin, single trades on the order of 100BTC can send the price up or down $30. (Note also that the quoted "price" is a weighted average of exchanges. The price has been observed going up or down when the blockchain was actually getting flooded with transaction spam, and non-spam transactions were near-impossible; this is because trading inside the exchanges didn't stop, even though it wasn't linked at all and you couldn't transmit bitcoins between them. So the number to worry about is not depth of all order books, but depth of the order book on each exchange.)
- DennisP 9y ago
  That makes sense, thanks.