I have a question with a regard to the direct cause of price quotes, as I believe having a sound knowledge of this mechanism will be of benefit.
Now, I have worked within equity markets for a number of years and can hold my own when discussing p/e ratios, management issues and all other factors we would use in fundamental analysis. Unfortunately, my knowledge of the ATS, SETS and order books is comparatively limited, and so don�t know the reason why a stock will be at 10.00 one second and then 10.05 the next second.
Hence, as far as Forex is concerned, I was wondering if anybody knew how the MMs decided (if, indeed, there is ever any cognitive input from a human) what a currency pair should stand at from one second to the next. Why will the EUR/USD be 2.0095 one minute and 2.0100 the next? Furthermore, since retail forex is presumably a subjective affair (as far as the brokers are concerned), is there any opportunity for arbitrage between different accounts with different brokers?
I would be most grateful if someone could provide an explanation.
(Potential Forex Convert)