Finding out what’s normal in Market ?
Crowd that trades a specific security has a firm grip on the normal daily high low trading range and can easily and quickly spot any big price move beyond the normal range. Indexes are used to measure changes in the overall stock market. There are many different indexes, each made up of a different pool of stocks (though there may be overlap among them). Core assumption that high and low prices are temporary and a price will tend to go back to its average over time, it is called as “reversion”.
In futures trading, a market with adequate supply. In this type of market, the price of a commodity for future delivery should be equal to the present cash price plus the amount of carrying charges needed to carry the commodity to the delivery date. while A constrained market is a market where all or part of a change in demand is not reflected in a corresponding change in supply but instead in a change in consumption elsewhere.
Prices are clustered around the average are normal and represent the market consensus of the rough equilibrium price for the day. The prices farther away from the normal price tend to deviate by only one unit from the average in each direction, higher or lower. This unit is named a standard deviation. It is used in Bollinger band as default 2 unit in the chart settings to show price extremes. Market normal price is for a particular time but normal price is for a period of time. Market normal price is the price prevailing on a particular day or a particular time. It is the result of market demand and supply. Normal price, on the other hand, is the result of long period demand and long period supply.
Market normal is determined by temporary equilibrium between the forces of demand and supply at a time, normal price is the result of long-run equilibrium between demand and supply when the supply conditions have fully adjusted themselves to the given demand conditions.