Perhaps trading is similar to poker. zero-sum game with finite money. But the former has commission and tax, while home poker has not. Average person make roughly 1200K over his life. (40k times 30 years) If he saves 30% with 360K, after living expense, he must pay comm+tax among principal seed of 360K. What is the maximum comm+tax that a trader (with seed of 360K) is supposed to pay?
Suppose there are exactly million of trader in market and each has seed of 100K. Over long enough time (such as 50 years), how much is the total comm+tax, by the ONE million over the 50 years? My estimate is more than half of the pool (one mil times 100K) that goes to casino. If so, this is NOT a game against the other participating players, but a game against the casino. Poker might be better than trading over the 50 years. For example, if he pay 1% (1K) every year based on a starting seed of 100K, over 50 years, the total comm+tax is exactly half of the seed. That is roughly $80 every month.
It depends what you are trading but perhaps you will realise that the calculations are nonsense because it isnt a zero-sum game and there isnt finite money.
I mean strictly equity, and furthermore I never loan to buy equity, except my fault in clicking mouse. Also, Poker has no loan and Equity has dividend. / difference. Like future/option, Poker has no collateral loan. Two are similar. As we can double the stake in Holdem poker as soon as 8 players agreed, we can easily change the stake in future. Like Bond, equity has dividend and has collateral loan. Two are similar.
poker has nothing to do with equity trading, really nothing, except for the part of emotions and bankroll management. poker is a game. a zero-sum game. what you win, another player has too lose. one could argue that forex is also a zero sum game, since currencies are mean reverting. not completely, since currencies are also strenghtening or weakening constantly over a long time. but almost completely a zero sum game. though that doesn't count for equities. equities are not zero sum. everybody could make money with equities if he just buys and holds an index (forever). have a look at the dow index from 1920 to 2015. always up - from 30 USD in 1920 to 18.000 USD 2015. there's inflation, there's quantitative easying, there're shifts in companies profits. equities only go up over 100 years. in nominal numbers, that doesn't mean that the value itself goes up. but the numbers. so poker and equities are a totally different kind of things. what i like most about trading - you can scale it up, if you are successful. If you can trade the NQ well, and you have enough bankroll, you can do it with one contract or with ten. doesn't make a difference. try scaling up in poker - using 10x buy in you get into a totally different league and you need to learn the new rules again and adapt... not easy. in trading it's still the totally same chart and setup as before.
I have to admit your point. From index100 to index 18000, most win in the long run. Therefore, I need to change my word. "Equity is zero sum with respect to index change" For example, when index rise from 15000 to 18000, everyone wins 20% / Furthermore, anyone who win less than 20% during that time is actually loser. Unlike poker and lotto, probably there are ONLY(?) three capitalism tool that follow currency inflation. In my guess, those are equity+realestate+bond. Of course, derivatives like future/option are NOT.
Based on the Buffet report for 50 years, such as http://www.berkshirehathaway.com/letters/2014ltr.pdf SnP500 index rise annual compounded 9.9%, for the past 50 years. Among the 9.9%, roughly 1% or 2% are from dividend, isn't it?
I agree that poker has nothing to do with equity trading, you make too much in video poker, casinos can block you from playing, and even if you make say 100k on 100k year after year, you have limits as far as how much casinos will let you play, I have a friend who was won between 100-200k 18/20 years, playing only best pay back and progressive casinos. She makes out big on the points she makes on those little cards you stick into machines too, free rooms/shows/buffets/airfare/cars, she has done well in a limited way of living, but it is impossible to make more playing this one segment. Whereas in equity trading, over time you can build up how much you make by account going up, and for most part, unlimited profits.
Yes, for about 50 years (from 30 to 80), 9100 times is rough idea for "unlimited profit" which is same as annual compounded 20%. Note that 1.2^50 = 9100.438 =9100
the old zero sum game and poker analogy come up again. lol. I confess to liking the analogy of poker with trading for some aspects the most important two being game selection and the need to crush your opponents. Check here for a superb post on zero sum game by MrN who does talk a lot of sense imo. http://www.elitetrader.com/et/index...ro-sum-game-debate.286091/page-2#post-4014990