4. Liquidity, Premium & Discount
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Who is user? Why would your Zoom
name be user? For crying out loud,
your Zoom name should carry your name. Okay, so
liquidity. What is liquidity? I believe by now
everybody would have a pretty much, pretty much
have a close idea of what liquidity is in Algor.
So what is liquidity, guys?
It's what drives the market.
You said what? It's what drives the
market. Yeah, what drives the market.
Okay, under contribution. Or just
known points in the market where
money is said to be resting based
on, you know, like the different
types of trading we talked about in the
first day. Yeah, okay, that's about it.
Under contribution. It's a
block of order, maybe sell,
maybe buy for taking out in the future. Okay,
you see, that's one thing about liquidity.
The definitions are usually fancy. Everybody
is pretty much close to what liquidity is in
a market. But the major challenge what the
people have is when I ask this question,
what is liquidity in the market? How do you tell
what liquidity is in the first market?
We know it is what drives the market.
It's the level that money is
sitting on. Yeah, it's this,
it's that. But what is liquidity in the market?
Nobody's saying anything, man.
Oh, sorry, I thought you said, I
think he's asking a question. What
is liquidity in the market? So that's
it. That's always the answer, man.
Every time I ask that question,
it always comes with a silence.
It's just magical. I don't know how it
happens, but everybody just goes mute.
Then the next thing I do is I put the question
in a better way that is going to simplify it to
you. And a number of people begin to get
it from here. So it's how it goes next.
How? We know liquidity is money, right? So how
do you provide liquidity to the market? How
you as a trader, because there
is no money in the market,
money is being provided. So the money
being provided is what the market is
taking to carry out the transactions. Do
you understand what I'm saying now? Yeah.
So how do you provide money to the
market? Pay my stop loss. Somebody
says stop loss, pending orders,
things like that. Transacting.
Can you say that again?
Transacting. So pending orders,
things like that. Actually going into the
market and placing an order instantly.
That's providing liquidity. Yeah.
So now you see what I was saying?
When I put that question that way,
a number of people start to get it.
Can you see that everything you needed to know
about liquidity, it actually started from your
empty form. Liquidity is money you provide to
the store, to the cashier, to the attendant,
for a product to be given to you, right? So
now liquidity is the value you provide for a
transaction to happen. So you ask yourself,
how do you provide liquidity in the market?
And you would realize that this has nothing to
do with equal lows, equal highs or whatever.
However, it has everything to do with
how you put your money in the market,
which is by setting a limit order, a stop order,
the buy stop, buy limits, stop sell limits,
by setting your stop losses, by executing
your trades, by setting a break even,
any type of order at all that you would like to
place in the market. That order you're placing
is you providing liquidity to the market. Now
you have stop loss, you have pending orders,
you have execution orders, which is
market execution, you have break even.
Am I correct? Yeah. Is there any other
way other than this, is there any other
way your money is being represented in the
market? No. Right? There is no other way,
isn't it? Or if you have any
other one, please let me know.
None, right? So all of this is what liquidity
is in the Forex market. The last time,
the last class I had on liquidity, somebody said,
take profits. Take profits is not liquidity.
When you said take profits...
