Introduction
By way of introduction, it is important to emphasize that in any financial market, whether physical or virtual, imbalances or differences between supply and demand are generated.
These imbalances are usually considered as the kinetic force that gives life to the markets, basically because when differences are generated between supply and demand, conditions are created that allow both buyers and sellers to negotiate.
It is to be understood that the bid-ask spread is an extremely important determinant of the prices that are established in a negotiation within the cryptocurrency market.
This is because the bid-ask spread usually significantly affects the return for or against any cryptocurrency, hence, knowing how to correctly estimate the bid-ask spread is of utmost importance for cryptocurrency investors.
Another important element to highlight is that the bid-ask spread serves as a parameter to know or project the illiquidity of the financial markets, in addition to the magnitude of the bid-ask spread.
This is basically because they can enhance the economic growth of a particular cryptocurrency, therefore, in the specific case of those who buy / sell cryptocurrencies, knowing the differential between supply and demand would help us to take advantage of the operations we are executing.
In the next post, we will talk a little about positive slippage and negative slippage with illustrations of prices that occur between the bid-ask spread.
SOURCES CONSULTED
➊ Financial Pipeline Staff The Importance of Bid-Ask Spread. Link
OBSERVATION:
The cover image was designed by the author: @lupafilotaxia, incorporating image: Source: Tradesanta
Greetings dear @lupafilotaxia concocer the aspects associated with the dynamism of supply and demand, will provide us profitable scenarios when facing real operations. Thank you for sharing such valuable content.
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hello @lupafilotaxia,
when we know if there is an excess of supply in the market we can establish a probability of where the price is going, in other words if there are many people selling normally the price tends to fall. on the other hand people who are dedicated to buying and selling cryptocurrencies should use this type of indicators to determine a possible entry and exit of the market.
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Greetings my friend. For traders it is certainly necessary to take advantage of all the information on prices and volatility to predict and analyze the movement of the same, thanks for introducing this parameter to enhance operations.
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Very interesting content friend @lupafilotaxia, definitely understand how the supply and demand differential works within the crypto market, it is one of the elements that will allow us to understand that there is nothing "magic", as far as the development of this market is concerned, only the simple application of fundamental economic principles, which we must know if we want to be successful in this type of environment.
Have a very productive day friend Luis
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@tipu curate 5
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Upvoted 👌 (Mana: 1/6) Get profit votes with @tipU :)
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yes, indeed with cryptocurrencies it really helps people to fulfill the economy, and can also work sideways, I like talking about crypto issues, to make my trust in investing calm. thank you for sharing
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This picture, It shows the volume on both sides of the market, right...
I just don know how it influences my decision as a trader
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