This was a discussion many years ago when all markets were able to trade at penny precision. Fine for SF and PE, a problem for fabs or expensive items.
$17,800.00
$17,800.01
It was bad. People would cluster at the price and not move the price in any meaningful way. Spreads would stay wide with everyone competing to be “first”.
The current solution is a compromise. It’s the least effort, least confusing implementation. Yes it’s not ideal at the high end before it rolls over to the next sigfig, so in the 7’s 8’s and 9’s it gets to be 0.2% or 0.1% change in price per tick. I think the game naturally, at the size its at, wants to be at around 1%. I find markets trade “the best” at this level. Carbon, most metals, lfabs, oxygen, hydrogen, EPO, etc. These markets don’t really have a problem with penny wars. If you want to be first, you have to put up a substantially better economic price.
However, imposing a 1% price change rule creates indeterminate and unpredictable “next best price” slots. You can’t easily do the math in your head as things become non-linear.
I think the best solution is to make things more granular, where we sub divide it again at the 5 level, limiting the minimum tick size to 0.5%. Rather than implementing more complex systems. It needs to be intuitive to people who don’t understand this stuff deeply.
$499.00
$500.00
$502.00
$504.00
etc
$998.00
$1000.00
$1010.00
etc
I don’t think 7% is the right number at all, that’s way too coarse.