This is the mechanism for setting prices in the financial markets. Most analysis of the financial markets focuses solely on price which ignores the context under which those prices were made. This is why an understanding of the auction process and other market participants is crucial for any study of the financial markets and any market that is financial in nature. There are three dimensions to any auction: - Price advertises opportunities - [[Time]] regulates advertised opportunities - Volume measures the success or failure of advertised opportunities Think of a grocer who has an inventory of food for sale. The grocer sets prices for the inventory and as customers make selections the success of those advertised opportunities to buy apples or frozen pizza are recorded by the grocer in the form of sales receipts. If the grocer bought too many apples they may need to lower the price of apples to sell the inventory prior to the apples going bad. Likewise, if they set the price of frozen pizza too low and their inventory gets too low they may need to raise the price and buy more inventory. These are the causal forces of supply and demand at work in a grocery store and are no different, yet infinitely more complex, as the causal forces at work in the markets. **Case Studies** - [CHG Issue #142: Finding Order in Disorder](https://cedarshillgroup.substack.com/p/chg-issue-143-finding-order-in-disorder) - [CHG Issue #35: Auction Theory](https://cedarshillgroup.substack.com/p/chg-issue-35-auction-theory) - [CHG Issue #36: BWIC](https://cedarshillgroup.substack.com/p/chg-issue-36-bwic) Explore Further: [[Short-Term Trading]] | [[Know your Competition]] | [[Markets in Profile]] Tags: #Concepts Your support for Cedars Hill Group is greatly appreciated <form action="https://www.paypal.com/donate" method="post" target="_top"> <input type="hidden" name="hosted_button_id" value="74PGN8ZXHQVHS" /> <input type="image" src="https://www.paypalobjects.com/en_US/i/btn/btn_donate_LG.gif" border="0" name="submit" title="PayPal - The safer, easier way to pay online!" alt="Donate with PayPal button" /> <img alt="" border="0" src="https://www.paypal.com/en_US/i/scr/pixel.gif" width="1" height="1" /> </form>