Just because 90% of retail day traders lose money doesn't mean you're taking money from 90% of traders, and it certainly doesn't mean you're taking money by force or manipulation the way the big players do. Does a zero sum game mean 90% of the players lose? If I put on a long position at 50.00 and sell at 60.00 does that mean the party I bought from lost 10.00? Absolutely not! The person I bought from may have bought at 40.00 and sold to me at 50.00. The person I sell to at 60.00 may then sell to someone else at 70.00. I remember NFLX stock selling off in extended hours trading following an earnings announcement one day. Those who had bought NFLX at 30.00 and sold then at 40.00 during that "panic" selloff made money. Those who bought from them at 40.00 may still be holding and up some 450% on the investment. Some may have bought NFLX as it was making crazy new highs on December 1st last year, and the party who sold to them, laughing at what kind of dumbass would buy at that price, may have made good money, but the party who bought at that high and held during the pullback consolidation in which the uptrend was fully intact, got to see their trade gain 18% at the last high. Without participants, there would be no market. There is no one forcing a trader to take large losses and cut profits short. There is ample opportunity in both directions and all time frames. Those who make a living trading pay taxes, buy stuff in our consumption-based economy, and many of them contribute charitably with time and money. There's no more reason to be proud to be a trader than there is to be proud to be black, or proud to be American, or proud to own ten houses. Just as there's no reason to be proud to be a teacher if you're an ineffective teacher, or proud to be a doctor if you're an ineffective doctor, or proud to run a charitable organization that fights to find a cure for cancer or diabetes when half your sponsors sell products that have a strong correlation to promoting cancer, and you fail to inform people about scientific evidence of how to prevent cancer in the first place. I'm not proud to be a trader; I'm proud to offer help to those who need it, though.
To truly understand why there are "traders" in commodities, one needs to understand why the Commodity Exchanges arrived on the scene in the first place. Then you can answer the question posed with a clear conscience. We are risk takers, we accept the risk that the big "movers" of the commodities need to transfer to a whole lot of small speculators to finance that movement from the producers to the end users. This is a legit business.. The majority lose, but that is the "HOOK" to draw in the many..........a chance to win a whole lot of money by putting up just a small margin. 5% margin is the hook to double, triple your margin money in a day..........day in day out. Sure most lose, but who said it was supposed to be easy when such a reward is offered? I am a consistent loser by buying lotto tickets...........but NO GUTS, NO GLORY (margins are like ET, ya know you should atay away, but the entertainment is the HOOK)........
Yes. The stock-market example is valid only because it's not zero-sum, i.e. there are generally far more longs than shorts. Therefore, when the price ticks up there's a big net gain, and when it ticks down a big net loss. Of course not everyone can actually realize that gain at the same time, but you get the idea. In futures longs and shorts are equal, so it's impossible for anyone to make money unless it's taken from somebody else.
90% is just a number I hear quoted, I don't know the exact number. The point is that someone has to lose. Never said it was by force or manipulation, or anything else. you are missing the point, I was responding to the guy who said he made a living without taking anything from society. In economics, trading was invented by people because it was supposed to be a win-win. I trade you something I produce for something you produce. Now though I trade contracts without producing shit in the process. This assumes the stock started at 0 and keeps going up forever, they generally don't. Again misses the point- why does the stock even exist and move up in price? It's not because of you, it's because somebody else created value. I'll grant you that in the purest sense you made a loan to the company. The money you made was because you gave them a loan and took some of the created value- in the purest sense. In that case the 'loser' was the company that had to pay you. The reality is probably somewhere less than that ideal as there are tons of specs who jump in and out without waiting for real value to accumulate. true enough, but at some point there are enough participants and it is probably the pure specs who are pumping up volatility. Take the case of pork bellies. PB used to be a speculators market, now however it is pretty dead except for the commercials and maybe some locals. Did the PB market go away when retail left? I don't hear any clamoring in the bacon market about the lack of liquidity, it seems that they just went on with life. On the hand what would we be if the people who produce left the markets? And the thousands of losers do what? You had to get the money from somewhere.
How is this any different from the fact that if I get a job and 9 other people who applied don't, 90% of the applicants lost? It happens all the time, obviously. That's just life. I don't see why you would single out trading as an activity where this was somehow more egregious than in any other area of a competitive economy.
When a company floats new stock, the money goes to the company, execs, etc. After that the stock trading creats no value except to the stock owners, they own the stock because they are speculating on the business prospects of said company. All that so called NEW value of the stock was in truth drawn from some other source...............nothing NEW was created. Stock trading is just a transfer of money from one hand to another. Commodity trading in true form FINANCES the transfer of risk that is "an economic necessity".. HOG OUT!!
And there is one of the dirty little secrets about which few ever speak A stockâs value (price) â is all about perception (post IPO) (May help many of you who can't seem to figure out why a stock's price moves the way it does) Commodities â totally different story RN
HA, the reason the pork belly mkt went away was because of A LACK OF LIQUIDITY as the commercials no longer used the mkt to transfer risk because they got so big they could control prices and no longer needed to hedge a controlled product, they have their own cold storage etc. The PB mkt was a speculators mkt...............it never really was a huge hedgers mkt to use. The specs in PB left when all the financial futures came on board. Were Tulip bulbs hedged by commercials? I think not. Lack of commercials killed the PB mkt.