Can Short Term Trading Be More Profitable Than Long Term

Discussion in 'Trading' started by Fundlord, Apr 7, 2015.

  1. I agree wih you but was afraid to be so radical to say it "is not a zero sum game".
    And everybody will find value in it I am sure. Although for some it can be negative value.:D
     
    #71     Apr 11, 2015
  2. dbphoenix

    dbphoenix

    I wouldn't say it's radical. Depends on how well understands what markets are and what they're for. If one understands all this, he also understands that random walk is silly, though it can make one appear to be profound.
     
    #72     Apr 11, 2015
  3. kut2k2

    kut2k2

    The problem with the zero-sum game description is that it completely ignores the fact that a trade consists of two transactions: an entry and an exit. The trader who takes the opposite side of your entry is almost never the same trader who takes the opposite side of your exit. And it is entirely possible that all three of you may end up winners. Or all three of you may end up losers. Or any other combination of winners and losers

    The "zero-sum" applies to the total amount of money won or lost during a time period, not to the number of traders who are winners or losers.
     
    #73     Apr 11, 2015
  4. So the calculation becomes very difficult because all the hedges should be included too. Each of the traders can have a countertransaction to the trade in futures or forex. And this countertransaction can be a win or a lose too. If it is a good hedge it's result will be the opposite of the result this person had in the future or forex transaction, at least that is the purpose of hedging.
     
    #74     Apr 11, 2015
    1. In game theory and economic theory, a zero-sum game is a mathematical representation of a situation in which each participant's gain (or loss) of utility is exactly balanced by the losses (or gains) of the utility of the other participant(s).


      Note this definition uses utility. If I have successfully hedged, even though it cost me an acceptable monetary 'loss', ie cost, I have gained utility inasmuch as I have achieved my objective at an acceptable price.

      Typical use though is every dollar I gain is paid by someone else. That may be simplistic, some are in the markets for the thrill and happily pay the price, but those there purely for the money view it in purely monetary terms.
     
    #75     Apr 11, 2015
  5. There was a reason for using that word. I'm just pulling this out of my ass, but I have a hunch that there are far more successful swing or long-term traders than there are day traders.

    So, if you're currently a swing trader who's able to exploit that large up swing or down swing, it's not likely that you can become a day trader and exploit those smaller swings efficiently and profitably just like that. :)
     
    #76     Apr 11, 2015
    Buy1Sell2 likes this.
  6. dbphoenix

    dbphoenix

    Even so, that you gain does not mean that someone else must lose.

    Theory's theory. Reality's reality.
     
    #77     Apr 11, 2015
  7. dbphoenix

    dbphoenix

    Not without a thoroughly-tested and consistently-profitable trading plan, no. But few traders have one. They'd rather pull their trades out of their . . .
     
    #78     Apr 11, 2015
  8. Novel view.
     
    #79     Apr 11, 2015
  9. So futures and forex are not a zero sum games because part of the profits and losses are realized outside of the futures and forex market. In all kind of hedges.
    What I lose in my forex transaction I make as profit in my company, the same apllies to the futures to hedge my metals.
     
    #80     Apr 11, 2015