Unveiling the Secrets – How is the Price Formed? It is only natural that price formation process indicators forex mt4 strategy interesting for just about anybody. And it is not important whether you want to buy potatoes or shares of an oil company – the matter of prices is always relevant, especially for those working in financial markets.
And if you have any questions regarding why and how the prices change and form you will find the answers in this article. Price formation is one of the key elements of market economy functioning. The price of a commodity or a service is formed as a result of numerous economic, political and social processes and this is true for traditional commodity relations as well as for financial markets. We commonly distinguish between two major aspects of price formation: centralized and market ones. In the context of stock and currency markets the market price formation based on the principle of demand and supply is considered a priority. In other words the price of a currency or a security constitutes a sum that a buyer is willing to pay for it.