Who is losing money on the street ?

Discussion in 'Trading' started by uniafly, Feb 10, 2008.

  1. uniafly


    Hi !

    I have been trading for almost 2 years. During my first 6 months made about $4500. Next year I made $50 000, from a $31 000 account.

    Many people it seems like make a lot of money trading stocks, my question is who are those people who lose big money ?

    If someone makes $10 million dollars, it means someone has to lose $10 million dollars.
    Such a risky business… why people subject their money especially big money to this kind of business like buying selling stocks ?

    I honestly still hardly understand this trading business…

    Who is losing money on the street ?

    Another question for entire 6.5 hours someone is selling and buying certain stocks … for example WFC. I normally trade only at certain times of the day. But who are these folks who are buying selling non stop ? Market makers who make the market ?

    Do marker makers have to pay a commission or a market maker can sell and buy from himself as many stocks and he wants ? Can they make a false volume ?
  2. stocks are not a zero sum game.
    futures are.

    let that fact sink in before asking anymore questions.
  3. especially in bull markets by taking on alot of risk (though they don't think it's alot because they have yet to blow out). When the market transitions to a bear market they lose everything they "made" and some more since they were clueless as to how they made the money to begin with.
  4. Ignoring transaction costs which are now very low...
    Short term trading in stock is a Zero Sum Game...
    Long term investing in stocks is not.

    Pros practicing some form of arbitrage, market makers, and scalpers...
    Are usually hedged close to 50/50 long/short...
    And do not benefit from long term stock appreciation in any way.

    This forum is about trading... not investing.

    Let these facts sink in... before you post any more nonsense.
  5. uniafly


    It is all very cloudy.. I dont think that most people really understand this business.. including those who post here on this site
  6. agreed. there are many layers of complexity.

    Even the zero sum game argument has its holes. Financial markets have its holes and leaks. ie commodities appreciation or stock appreciation may come at the expense of other markets' outflows (bonds, currencies) - the stock market may not be zero sum by itself, but in a total market picture, there is may be a zero sum in terms of total portfolio flows.

    Even a futures market that can be arbitraged to a non-zero sum market (like the stock market, which can proxy overall economic growth), then effectively a futures market can act as a part of the same non-zero sum game the stock market reflects (ie you can buy AAPL single stock futures, or ES futures. the seller may be an arbitrager who loses nothing by selling you the future even if the future gains.)

    my point - such simplistic arguments are redundant and pointless.
  7. rosy2


    it could be someone makes 10 million and a number of people lose a total sum of 10 million.
  8. Stock are NOT a zero sum game, since stocks are backed by companies that get larger and more profitable in the long run.

    Check out this historical Dow Jones chart:
    The long term trend is clearly up.

    Futures, being based on indexes, tend to go higher in the long run, not being a zero sum game.
  9. uniafly


    Well we kind of understand that ...
  10. Why? Do you think when you lose money some of it goes to your local charity automatically?

    No it don't. It goes rightinto the pocket of someone else.

    Now, do you still think trading is not a zero sum game or you discovered some way of letting winners make less than what you lose?

    #10     Feb 10, 2008