AUCTION MARKET: Easy explanation.

In this video, you will learn about the auction market and how it works.
#auctionmarket #buyersandsellers #wallstreetmojo #financialmarkets #marketmechanism
Chapters:
00:00 - Introduction
00:27 - What is an auction market?
01:24 - How does the auction market process work?
02:16 - Examples
03:05 - Auction market vs dealer market
03:47 - Comparison between Auction Market & Dealer Market
What is an auction market?
You might know an auction market where a seller keeps something for auction to which buyers put in their bids. Whoever has the highest bid gets to buy it.
The same thing happens in the financial markets too. Buyers and sellers quote their price for buying or selling the financial assets, and the transaction is completed just when there is a match between the prices.
(Explained in detail in the video)
How does the auction market process work?
The entire process of an auction is simple. On the one hand, buyers put in their buy orders for the financial asset, also known as bid. On the other hand, sellers put in their sell orders, also known as ask.
Once the bid and the ask price match, the transaction is complete.
(Explained in detail in the video)
Examples
The Chicago Mercantile Exchange (CME) and the New York Stock Exchange (NYSE) still operate the open outcry trading system where the auction process happens as traders shout their bids and ask prices.
The trading that happens on computers also happens through the auction system only. However, the electronic method has some advantages: it costs less, execution is better and faster, and there is less manipulation compared to the open outcry system.
Auction market vs dealer market
In an auction market, buyers and sellers quote their offers, and the transaction happens when their orders match. In a dealer market, the dealers specify a price at which the financial asset shall be sold or bought.
In an auction market, there is a plain matching of orders after some price discovery takes place. In the dealer market, the dealer is a market maker as they are creating liquidity and transparency in the market.
In the auction market, all types of securities are traded, equities, futures, and options. In contrast, the dealer market is the place for the OTC securities market and government securities market.
(Explained in detail in the video)
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[@lovevalerie14]

This video enlightened me so much! I'm struggling with how these two work in the market. I spent time researching and watching videos about this, but none of that enlightened me but this video of yours allows me to analyze it so much! Great work! 🩷

[@wallstreetmojo]

Glad it was helpful!