[logfromblammo]

That trade is not going to happen, man. That's another way of saying that everybody is already perfectly happy without trading at all.

If trade volume is zero, the auction reports the price as whatever the most desperate seller would accept. Anyone who wants to actually buy in the next interval should probably offer more than the value reported in the previous interval.

But since the trade orders are secret, you don't actually know how big the spread is. You only know how much traded at the last price. Again, you are very intently focused on something that has very little relevance to the proposed system.

You have no way of knowing what the spread is. That is intentionally hidden via a cartel arrangement to exclude arbitrageurs. No one trades unless everyone is happy with the trade. If no trades occur, everyone was already happy enough with what they have. That is not a problem that needs fixing.

[harryh]

OK, let me make a real world comparison. Imagine the market for collectibles in the pre eBay world. The market was much less efficient. It was much harder to match buyers with sellers. If you had a Ken Griffey baseball card to sell you probably couldn't get a great price because matching up with a buyer was harder. At the same time if you wanted to buy one you probably had to pay a higher price because you had to go to a special baseball card dealer. Spreads between what you could sell for and what you had to pay to buy were very large.

Then eBay comes along and the market is way more efficient. You can buy and sell with anyone in the world and it's (relatively) fast and easy! Bids go up, asks go down and spreads decrease! It's a win for everyone other than the middle men (baseball care dealers).

The faster and easier it is to trade, the smaller spreads are, the better pricing is, the less middle men make.

Your proposal would move the system back in the other direction because you're making trading slower & harding and impeding information flow between everyone. There is no market in which secrecy or slowness benefits the actual customer and not the middle men.

[logfromblammo]

You do realize that you just said that the auction site eBay made the markets more efficient than the professional trader card dealers, don't you?

[harryh]

Yes. That is exactly what I said.