1. The Stock Market from a
Physicist’s Point of View
EC4024 Lectures 5 and 6

2. Today & The Next Day
Is the capital market a market for capital?
Supply and Demand
Some mathematical ideas
Supply and demand reconsidered
Mrs Ryan Buys a dress
Idealised, realistic supply and demand
Limit Order Only Markets

3. Is the capital market a
market for capital?

5. Set B
Function
Set A

6. y = f(x)
Range, Domain
Ordinate, Abcissa

8. Mrs Ryan Buys a Dress

12. Limit Buy and Sell
Orders

13. Price Priority LO(Buy) LO(Sell) Priority
D(p) S(p)
> 46 0 - - 1 - 5
p = 46 0 - 0 1 5 5
p = 45 1 1 1 1 4 4
p = 44 2 2 1 1* 3 3
p = 43 3 3 1 1 2 2
p = 42 4 4 1 1 1 1
p = 41 5 5 1 - - 0
< 41 5 - 0 - - 0
Order example. LO(Buy) is a limit order to buy, similarly for LO(Sell). S
.
Price Priority LO(Buy) LO(Sell) Priority
D(p) S(p)

14. Next Time
• Do exercises
• Read Pilbeam, chapter 6