RE: Valuing Steem Rewards As Taxable Income Is A Vast Overstatement Of Tax Liability - Part 2 - The Thin Order Book & Flash Crashes
Man, they should be teaching this stuff in schools.
You make this complicated topic into something surprisingly fascinating. Thanks for helping me understand the order book.
Maybe you should be teaching this stuff in schools.
EDIT: The order book stuff is especially fascinating. The first time I've encountered this graph is in the Steemit internal market. I went hunting around Google to see similar charts for NYSE stocks, but it seems like this sort of info isn't available except to traders paying for the service, am I right?
So, on the internal market page, it looks like I can put in an order to buy STEEM only when it gets down to a particular price, or sell it only if it rises to a particular price of my choosing. But if I were to sell, say, a large volume of STEEM in a hurry at the current highest bid, I would only be able to sell so much of it, thus forcing me to lower my price and drive the market down. Again, am I understanding this right?
"But if I were to sell, say, a large volume of STEEM in a hurry at the current highest bid, I would only be able to sell so much of it, thus forcing me to lower my price and drive the market down. Again, am I understanding this right?"
Exactly right. The more you sell, the more you would drop the price. Unfortunately, I'm not sure if it's possible to accurately model exactly how much selling pressure it takes to drop the price at any given time. I can compare the relative volatility to something like Apple stock, but only with the benefit of hindsight. I couldn't tell you at what point your personal slippage becomes material to your total income.
However, I can tell you it's about 66900x less than it would take if you were selling Apple stock, and I suspect it is actually very material to a lot of users. You absolutely cannot dump 6 figures or more without a material price change.
Thanks for taking the time to answer my question. Looking forward to the rest of the series.