The actual market is the range between the asking price and the amount the consumer is willing to pay. Both buyers and sellers aim to identify the scope of the market for a mutually beneficial transaction. Understanding the current real market can increase the chances of making a sale for the seller, while buyers analyze the available range of competitive products to arrive at a price they are willing to pay. The concept of a real market is also common to investment activity.
The actual market is the range between the asking price for a product and the amount the consumer is willing to pay. Identifying the range of this market does not necessarily mean identifying the fundamental value of the product, or even the retail price that the product commands in other markets. Both buyers and sellers seek to identify the scope of the actual market while trying to create a transaction that is mutually beneficial.
For the seller, understanding the current real market can increase the chances of making a sale. Setting the selling price often involves considering the current level of demand for the product, as well as looking at the prices of competing goods that are similar in nature and readily available to the consumer. If the goal is to maintain current business while winning business away from competitors, the seller will set the selling price at a level that is sure to attract attention and is likely to motivate consumers to buy.
Buyers also seek to determine the scope of a real market, as it relates to some product they wish to purchase. Here, the focus is on determining the level of interest in the product and how it would benefit the buyer. From there, the buyer analyzes the available range of competitive products, compares them for value and quality, and arrives at a price that he is willing to pay to purchase the product. Under the best of circumstances, the amount the buyer is willing to pay is in line with the seller’s desired price, allowing both parties to profit from the transaction.
The concept of a real market is also common to investment activity. Here, a dealer will take a close look at both the deals and the deals associated with a given transaction. Ideally, the dealer can match a potential buyer’s offer price with a seller’s asking price, allowing the deal to be negotiated, allowing both parties to be happy with the terms of the transaction, and collecting fees for the negotiated deal.
Another real market application may involve creating an investment strategy that requires you to buy a stock of a certain value when it reaches a certain price, and then sell those shares at a specified higher price. With this agreement, the investor provides the dealer with instructions to execute each segment of the order when and when those bid and ask prices become viable. Such a strategy can allow the investor to earn a significant amount of return, as long as he can hold the asset for as long as it takes to achieve the desired result.
Smart Asset.
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