Market price vs Last price | Trading concept to know

Key Takeaways

in this video we're gonna talk about price specifically we're gonna look at the difference between the market price in the last price to use stop orders effectively the difference between these two prices needs to be understood let's have a look the two prices that we care about are the last price in the market price now the last price is displayed prominently on the chart we can see this flag just here looking down for the market price it's gonna be a little harder to find it but if we look just in the middle we can see a price displayed to us in underneath it says the mid market price so this mid market price relates to the order PO in the spread in the price in the flag is gonna be the last price and that's gonna relate to the trade history now the trade history gives to us all of the trades that are occurring on the GX exchange in looking at the top of the trade history at the top of this list we can see that every time a new trade occurs that trade gets put onto the list at the top now that is gonna be the last trade so to get the last price we just need to look at the last trade of course the importance of the last price is this it is typically the thing that you're gonna see being displayed to you if you're looking at our real-time data feed or if you're looking at a real-time chart that's getting updated for you every time and trade comes in you're gonna get a new last trade which is gonna give you a new last price and that particular data feed is gonna update so anytime you're looking at a watch list or you're looking at a real-time chart you're seeing the last prices come in if you want to actually place a trade or you want to enter into a market the last price is not gonna be the price that you care about what you're gonna care about is the market price whenever you care about the market price you're gonna need to care about the order book cuz that's where you're gonna go to get the current market price that's how you're gonna find out what prices are available to you to transact in the marketplace now to figure out what price we can get in the marketplace we need to be looking at the order book we're just looking at this mid market price this gives us an idea of where the market is trading what prices we may be able to get into it's the midpoint between the highest bid in the lowest ask but it doesn't really tell us what price we can actually transact at at the time this is just the midpoint it's giving us a reference point telling us where is the spread right now because the spread is where the action is that's where trades are occurring right around the spread so we want to know where is it that we can start to transact we look at the midpoint of the spread that gives us an idea a relative idea of where the market price is so we're looking at historical data we're looking at feeds we can look at the last price but when we're trying to transact we need to be looking at the market price and the mid market price is the first place we can look but really if we already know about the order book we know where we want to go we want to go straight to the spread and we want to inspect it and see what is the supply and what is the demand right around the spread how liquid is the market right around the spread where we want to transact if there's a lot of supply and a lot of demand right around the spread then we know the market is really liquid and we can trust so if we take a look at the order book we can see that there really isn't a market price there are many prices in the market there are many different prices where coin is being offered so we look just at the top of the order book we can see that we have one Bitcoin available for this particular price and if we go down we see we have for Bitcoin available for this particular price so all of these bitcoins have different prices in the market place so there really is no single market price there are many prices we're dealing with a mini price market and the same concept applies to the sell side order book so if we want to know what our price can be we need to be able to look at the order book if we're a seller or a buyer you know look at the order book and we need to see how much coin is being offered at each price and those are the market prices that you're gonna be able to get so if you're trying to sell to Bitcoin then there is a bid right here of five Bitcoin available at this particular price forty one seventy so that is gonna be your market price but if you want to sell more than for Bitcoin that's not gonna be your market price you're gonna have to lower your price you're gonna have to go down here if you want to sell more than for Bitcoin one of the reasons that GX offers 0% for maker trades or maker orders is because it helps GD X to have a very liquid market price discovery because that's what the market is trying to do is trying to discover the true price of this Bitcoin the more liquidity we have around the spread the more confident we can be that we can transact at that particular price therefore the more true particular price is G Dax wants to incentivize market participants to create liquidity because that helps with the price discovery and it makes the exchange more reliable participants can look at the spread and they know they can transact there potentially in high volumes the higher volume you can do in transactions without moving the market price the more reliable the market is for participants the more you can you can look at the particular spread and you can feel confident that you're gonna be able to transact there this tells us that the two things we need to understand the market price is we need to know where the spread is and we need to know how much is for sale around the spread the more that is for sale the more that's supplied and the more that's demanded right around the spread the more true that price is because market participants can be confident that they can go to the spread and they can begin transacting without having to move the price up and down so that's how you can figure out what the market price is you got to look at both the supply and the demand but if you look at the last price so on the chart you look at the flag that's being displayed giving you the price that's at the top of the trade history and then you look at the midpoint the the mid market price just in the middle what I want you to realize is that these two prices are not the same and do not have to be the same and frequently if you've used ugx enough you've noticed named they're not equal the reason is because the flag in the chart is relative to the trade history and the mid market price is relative to the order book in the order book can change the spread can move up and down without actually having trades occur so that's gonna be very important when you're thinking about price when you're thinking about that trigger on a stop order when you think about the trigger what is the trigger the trigger is the price but what is the price which one we're gonna talk about that in the next video but for now keep in mind that the spread can move so the market price can change without the last price changing and that's because the spread can move around the composition of the order book can change without actually having trades occur oh this video was helpful please like the video subscribe and support this deep lizard channel thank you