Be a Price Maker, Not a Price Taker


Be a Price Maker, Not a Price Taker

PanXchange Blog

Virtually every physical commodity market (even specialty markets such as industrial hemp and specialty sand for the energy industry) is currently experiencing a significant oversupply scenario.  It’s a “buyer’s market” and as such, every buyer should be aware of the latest, up-to-the-minute values for inputs and should be utilizing every resource at their disposal to find the best prices for their desired products – both today and for deliveries in the future.

PanXchange can help with that.  

First off, buyers have access to all of the procurement opportunities on our site at no cost to them.  PanXchange follows the commission structures of traditional markets, meaning that all commissions are paid by the seller.

There are many more reasons to use PanXchange to help you confidently procure supplies without leaving any money on the table. Yes, that’s trader talk. Please feel free to use it!

Reason 1 – Negotiation

Let’s start by discussing my favorite feature our trading platform:  the hidden price tolerance. We all know that whether you’re buying hemp, frac sand or a car, if you say to your broker, “offer him $100, but I”ll really go to $120”, we know that you’ll probably never see an offer lower than $120.

On PanXchange, that extra $20 is hidden to all but you.  And here’s how it works to your advantage:

First, if you post a bid with $100 and a hidden tolerance to $120, you could receive an offer at $110 and the seller would never know you were willing to pay that extra $10.  Using a traditional broker, the odds are very high that you would have had to pay $120, thus wasting, or  “leaving the $10 on the table”.

Reason 2 – Be a Price Maker and Get Better Prices

Second, the PanXchange platform is designed to reward price makers, not price takers.  In short, this means that the first order on the system gets the best price, whereas other systems simply take the midpoint between the bid and the offer.  Let’s break that down with a real example in our sand market (where automatic matching still occurs since approving a COA is not required before trades) 

Reason 3 – Price Discovery and Real-Time Market Intel

The PanXchange platform is also a powerful tool to gain confidence in up-to-the-minute prices.  As an example, using our “product” again, let’s say that it last traded for near-term delivery at $100. You know you will need to get back in the market soon for delivery next month, but you’re not worried about finding supply.

In the interim, you decide to use PanXchange to figure out where prices are today for delivery tomorrow.  You put a bid in for delivery next month at $90, and wait to see what happens…. Do you receive any counter-offers?  At $110?  At $95?  Or did you not get any counters because the supply side of the market deems your price so low that it’s not a serious bid?  All of this provides fundamentally juicy market knowledge. And we invite you to take advantage of it.  It’s why we built it.