i dont know how we got off on the whole ZERO SUM thing. but it may be an eternal debate to settle over a cigar and a glass of Oban single malt next time i am in the states! I still say negative sum... make a $5,000 investment, pay $20 in commission=$4980 right off the bat. you start at a loss, making it negative sum. yes, there is a buyer and a seller...and they are equal sum...but we forget the third party...the broker. and in the end, the broker ALWAYS wins regardless of the outcome of the buyer and seller. moral of the story? the only guaranteed way to make money to be the the broker!!!
I agree. One tick on the ES = $12.50 Let's use Commision =$5.00 If you win, $12.50 - $5.00 = $7.50 profit. If you lose, -$12.50 + $5.00 = $17.50 loss. Hardly a zero sum game. st
You cant use those figures to figure out if the stock market is zero sum. you have to take the total amount of money you started with. You start with 100 bucks you make 12.50 -5 =+7.50 one day you lose -12.50 - 5 =-17.50 the next day your account is now 90 bucks your account is now down 10 dollars and your brokers account is up 10 dollars. Thats why its zero sum. Come on, there must be someone on here that passed basic math that can back me up on this.
Trading is not zero sum because the wealth is not evenly distributed. The broker always gains whereas the players will either lose or win. (See example one in link) My example stands. As for your reference to the stock market itself being zero sum, that is wrong for the simple fact that stocks can increase in value without a trade being made. (See example three in link). http://www.investopedia.com/terms/z/zero-sumgame.asp Before accusing others of not understanding basic math, I suggest next time you do your homework beforehand. http://www.fool.com/news/foth/2000/foth000912.htm st
Who cares if it is a zero sum game, as long as I am net positive. I have seen these arguments over and over and I never understand what it has to do with real trading. If I made 20% this year, who cares where or who lost the 20%. Whether it is a zero sum game is irrelevant to my daily trading and is more like something academics who do not trade love to analyze with math and assumptions.
who cares about % gains except for mutual funds and money managers? everybody here on this site is an individual trader. its about how much cash you made, not %. i could care less if some dude here made 50% on his 20K account.
try this... take $1000 and open an fx account and start studying charts many fx brokers (eg oanda) let's you chose the exact position size no matter how small...USE THIS!!! that means youe can trade the 3-hour or daily bars while still keeping your risks proportional with $5k you can blow out the $1000 5 times over...but if you study up on money management and position sizing each $1000 should last you a long time at least this could teach you trading if your paying attention, you wouldn't be able to do this in any other markets with only $5k