Trading is almost NEVER a Zero Sum Game

Discussion in 'Prop Firms' started by mjl, Apr 19, 2009.

  1. Read up on Lawrence Harris and find out which kind of trader you are and who you are trading against.
    Unfortunately, for most of us, we have only been doing research.
     
    #11     Apr 19, 2009
  2. Just a point. Stocks are companies...a company can make money and pay dividends or cause price to move up. This tends to negate the purist form of "zero sum game."

    And if someone bought a stock from a short seller...and assume the price did not move...the short seller collects interest on the money generate from the short stock sale.

    And, just for fun "Who is the biggest short seller of all?" The Company who issued the stock in the first place, right?

    Just a couple of thoughts.


    Don
     
    #12     Apr 20, 2009
  3. sbs17

    sbs17

    As long as one assumes that a stock will always go up, it is not a zero sum game. When one buys at 10 and sells at 15, he/she has made 5 dollars profit, and the person holding the stock at 15 now is holding the equivalent of 15 dollars. It's when the stock is no longer perceived as the equivalent of that money that someone loses. As long as the stock stays up in price and exists, everyone can be wealthier. Stocks are a creation of a new money equivalent.
     
    #13     Apr 20, 2009
  4. Trading it's a NEGATIVE sum game, because of broker commissions.
     
    #14     Apr 20, 2009