Can there be equilibrium?

<p id="isPasted">The concept of market equilibrium, where the number of buyers equals the number of sellers and the price is stable, is a theoretical ideal that markets tend to gravitate toward but never fully reach. Trading is a dynamic process driven by constant shifts in supply and demand, meaning that true, perfect equilibrium is fleeting.&nbsp;</p><p><strong>Here’s a breakdown of why a lasting equilibrium is not possible in trading:</strong></p><ul><li>Dynamic forces: In a real market, various factors—like economic news, interest rates, company earnings, and investor sentiment—are constantly changing. These variables shift the supply and demand curves, pushing the price away from any brief equilibrium it might have found.</li><li>Disruption creates opportunity: The very existence of trading relies on markets being in a state of disequilibrium, where supply and demand are unbalanced. Traders make money by capitalizing on these inefficiencies, such as buying when demand increases or selling when supply outweighs demand. If a market were in perfect equilibrium, there would be no profit motive for trading, as prices would be completely stable.</li><li>The pre-market session: While a full day's trading is never in constant equilibrium, a form of equilibrium, called the Pre-Market Equilibrium Price (PMEP), is calculated before the market officially opens. This price reflects the maximum number of matched buy and sell orders and helps set the tone for the day's trading. However, even this temporary equilibrium is quickly disrupted once regular trading begins.</li><li>Efficient Market Hypothesis: The Efficient Market Hypothesis (EMH) is a theory that suggests a stock's price reflects all available information, making it impossible to consistently find undervalued stocks. However, the hypothesis is controversial, and critics point out that markets are not always perfectly efficient and that inefficiencies can be exploited.&nbsp;</li></ul><p>Ultimately, trading is a continuous journey of prices moving toward and away from a theoretical equilibrium, with traders profiting from the ongoing disequilibrium.</p>