The far side of the trade

The moves that make the headlines are the drivers and attention grabbers. The market’s rises, the market’s falls, the volatility and swings along the way, are watched as though there is a person with a will and conscience and a trading app, who even has a name – Mr. Market – a good-natured fellow, if one were to imagine.

We know that this is not the case, but I don’t think we know it deeply. It can’t be helped, there is a clearing price and that is what stands out. What led to it – the struggle and the opposition, the negotiations and the limit orders – get brushed off by the headline. Mr. Market does this, Mr. Market thinks that, hooray for Mr. Market or, at other times, boo! hiss!

While there are elements of watching Mr. Market’s every move that serve an analytic cause, because the end-result that Mr. Market represents is the position of the presumed winner in a transactional zero-sum competition, that also presupposes that the contest ends and the result is final.

Which, of course, it isn’t, and can’t ever be: Mr. Market is always on the move, and has to, lest the little guy should lose his balance and get very badly hurt.

Thus, it is not a waste of time, I don’t believe, to watch the counter-move. The offset, the absorption, the market maker, the trader on the other side… for every action there is an opposite, and when Mr. Market speaks, either way, there has to be a counter view that represents his equal.

From recent headlines, for example, we can contemplate the opposite position, which enables Mr. Market, with diligence and some gratitude.

For every buyer, there’s a seller; for every seller, there’s a buyer. In times like these, especially, it probably pays to hear both sides.