thoughts on an auction

An auction drives the price movements. Price moves because of an imbalance between demand and supply. Prices move higher when demand is higher. Prices move lower when supply is higher. Prices move minimally when demand and supply are close to balancing and price does not move when they are balanced.

Almost everyone will have a different estimate of value. Value is just perception, therefore prices move because of perception. Value is always changin as perceptions are always changing.

A way to determine the aggregate value is to determine where the most trades took place. This is a place where a lot of buyers were willing to buy and a lot of sellers were willing to sell. This place will be a good representation of value as everyone was comfortable here. When traders move price away from the value area, into unexplored prices, then the other traders' perceptions of value need to change in order to change the value area. If the value area has been established for a good amount of time, then the majority of the traders would not want to change the value area until they are certain that a lot of other traders' perceptions of value have changed.

There are quite a few obvious movements that you can spot which indicate a change in value. I don't think that i have documented any of these yet, but i can picture what they would look like.