I heard that this is only true with Futures. In stocks there is a MM or a specialist which makes the phrase "zero sum" not true. Michael B.
I agree, with commissions it's negative sum game like what Alexander Elder said in his book Trading for a Living. That still doesn't remove the fact that all this money being lost is going to some winners besides the brokers.
yes, it is actually a double negative sum game. let me use scalping as an example --- one scalps for two YM points earning 10.00 per trade. let us assume a commission of 3.00 per round turn-- a winning trade earns the trader 7.00 after commission, a break even trade loses the trader 3.00. and a losing trade will lose the trader at a minimum 8.00--- so as you can see--breaking even is actually losing--you can lose by losing and you lose by breaking even--double negative to one positive. without a quantifiable edge, you will lose in this game. surfer
Wwatson: Your comment is amusing and predictable. Because you are young and stupid, I will overlook it for the moment, however at some point I will have to bitch slap you a bit. I hope you will take it bravely like a man, instead of crying to your mother that I am playing too rough. Here is your reply: "I sell COVERED DIA options!!!! smart arse" Yes how witty and to the point. What you are missing is that when you sell your covered options, you are at risk not only for the option, but for the value of the underlying that covers the sale. This is called systematic or institutional risk. In an adverse event, as the value of the puts you have sold goes through the roof, The value of the DIA that you are covering the sale with is declining. Because the sale is a covered sale, your broker will not permit you to liquidate the underlying unless you buy back the puts, deliver your shares, or post additional margin (Too bad your account remainder is going over to Lindq). Shouldn't you be in front of a television playing Nintendo? Good luck, Steve46 P.S. I certainly apologize to Wwatson's mother. I really have tried to be restrained in my comment. Please do not be angry with young Watson for losing the remaining few dollars in his account to Lindq. I am sure he will pay it back from his allowance in due time.
Still waiting for Watson's contact info. I'm not too proud to pick up an easy 5K. I'll just add it to the 19.5K I nailed this week from buying pullbacks. (You remember, the day everyone here was yelling "The sky is falling, the sky is falling!") How about it Watson? Where are you?
To all posters: I have just posted the following on the thread titled "What Sport do you practice regulary"(spelling). "Recently, I have been involved in a new sport called"bitch slapping young watson". This is a new sport that is low intensity and requires very little in the way of physical conditioning. If I am successful in this foray into the sport, I intend to advertise on ET to clients that may be looking for "financial domination". Eventually I hope to hire one or more of the female ET members, who will wear latex outfits and deliver insults to ET members via a camera equiped computer chat forum. I am very optimistic about my future in this business. I look forward to hearing from interested parties. Regards, Steve46"
Hey Everyone: You know I have been thinking about it. We all know that there are over 100 indicators, numerous execution systems, trading seminars of all kinds and yet there are so many traders who apparently cannot produce consistently profitable results. I have always suspected that what really separates the winners from losers is simply discipline. Adherence to a system, to proper entry and exit rules, to stop placement, to good risk management, to conservative position sizing. etc. Although I meant my previous comments as an attempt at humor, perhaps what is needed to change a loser into a winner is a good hard swat on the ass from a latex clad female, followed by a barrage of insults, every time the trader fails to adhere to the rules. Psychologists call this behavioral conditioning, and it works with lower animals, delinquent children and criminals. Why not with losing traders? I know many of you will smile and think this is another joke, but why not hire a third party to provide just that kind of service if no other approach has been effective? Think of the implications if it turned out to be an effective way to transform your P&L!! I look forward to hearing your comments. Best Regards, Steve46
I agree, but would add that the main culprit is actually the bid/ask spreads. More money is lost in the spread than commissions.