Is It Possible To Have Artificial Stock Market?

Li Ka Shing SG

Hi,

Do u think it's possible to create an entirely artificial stock market? I mean, made up.

Ok for discussion sake, let's start with an artificial stock or index first. Let's call it AX. This AX stands for Artificial Index. Traders can buy and sell, long and short, and you can also trade options and futures on it.

The only thing is, there is no underlying stock. This AX is made up. Virtual.

But think about it, as long as there are people trading, there is liquidity. As long as this AX moves, or even when it's sideways, then traders should be able to trade this AX too, no?

What do u think about this?

shade343 SG

Why not just play Neopets stock market? The price movement is totally random. Laughing

shade343 SG

ANyway, how do you put a value on the share if it has no underlying value? Confused

hisoka SG

how do yo create the news that cause the price changes etc?

Li Ka Shing SG

I didn't mean it would be random like the Neopets kind. The AX would move according to traders actions. Just like any other index or stock.

The only thing is, there is no underlying stock. But then, as long as traders trade there, there is liquidity there, there is movement, and even when it's going sideways, I mean people should be able to trade?

shade343 SG

I think at the most, you can have a virtual stock simulation index based on the actual price movement of teh real stock market.

shade343 SG

Traders do not affect the stock price. It is the perception of the underlying value of a stock that causes its price to fluctuate. Since that virtual stock has no value, why would people want to trade it? Waste time and resources nia.

Li Ka Shing SG

That's why this AX is gonna be so advantageous. You don't need news, you don't need earnings, inflation, accounting fraud or lawsuits. You don't need hurricanes, M&A, bonds, oil price, you don't need all that.

All you need is pure technical charting. Just concentrate on this AX.

kaobeikaobu SG

yes, but for what? Laughing

Li Ka Shing SG

You don't really need any underlying, do you? I mean, you don't need to have the actual stock to have dividends or to control the management, that kinda type. You only trade this AX for pure trading purpose. Why would people trade it? Because it's a traded index. There is money to be made.

The value and the movement will be determined by market actions. By the traders themselves, just like any other index. The traders determine everything. Just that it's minus all the real economy stuff like earnings, inflation, etc. As long as there is interest and liquidity, it should be sustainable. When a critical mass is there, there would be enough buyers and sellers.

So who will benefit? The technical traders, the exchange, and the broker.

A purely made up index.

ndmmxiaomayi SG

Go play neopets lah.

ben1xy SG

that's because u r thinking of it as speculation. that in itself is not wrong. but there are others that look at it as an investment.

they consider other factors like the business scope, long term growth potential, industry it is in, growth trends, yadda yadda yadda.

then u must take a step back and think why companies list on the stock exchange.... to gain capital. so while wad u r saying is not wrong... it is juz a different frame of reference

shade343 SG

Well..... would you buy air for $1? Or at best, something non existant for $1? Its impossible for the traders to determine the price of something with no underlying value or networth.