Quote from whitster: oh my god. you guys are truly amazing. PLEASE trade YM. i need some more traders to provide liquidity to me. thanks -------------------------------------------------------------------------------- What do you understand by liquidity? Why do you need more liquidity? Why you need the traders to provide the liquidity for you? Buy a Nymex contract and take it to delivery. That is all I ask you to do. Just do it. What do you fear. That you may not be here to tell the tale, that you may be wrong, that you may not survive, that you may have to save up on the gasoline fumes next time you fill up. You have stated your view of what you think. Let's see if you can share your experience after having gone through to delivery. Let's see if your view changes in anyway.
This is just unreal. Regardless of hedging, trading ability, or anything else, as whitster says, futures and options are zero sum. Stating otherwise is like saying 2+2=5; quite literally. I have little interest in belittling anyone, but this is just getting ridiculous. There is nothing to dispute here. Within the confined arena that is a derivatives market, no wealth is ever created and thus it is axiomatic that said markets are zero sum. PERIOD. But, but, but, nothing..... As i have explained over and over again, benefit and wealth are not measured solely by the dollar amounts of the futures offsets and for the person who delivers, that offset can be irrelvent. The fact that one can benefit AND be on the losing side of a futures transaction makes it a non zero sum game. Insisting on counting only the dollars of cash settlements is small minded, but understandable for a trader. The futures markets transactions do produce visible benefit, therefore they produce wealth, and therefore you and the likes of whitster are dead wrong. Trading futures markets for profit gain only without being connected to the underlying economic fundamental is what is zero-sum, or as close to it as practical.
"The fact that one can benefit AND be on the losing side of a futures transaction makes it a non zero sum game". false. you don't even understand what zero sum MEANS sad
Sure yes. Zero-sum mean the sum of zeros that imply zero transaction or zero execution, meaning that both traders didn't make any trades. Then where the wealth has been created? Right.
Surely you must be kidding. You can't change the definition of an apple just because it doesn't suit your needs. You HAVE TO (axiomatically) think of derivatives markets as a closed function; not as a something bigger than what it is. Your waxing philosophical and failing brilliantly. There is a time and a place to think outside the box, but here you simply CANNOT. Don't you understand that it's simply not a choice here? This is incontrovertible. You can rationalize all you want within your mental masturbation session, but 2+2 can never = 5, man. The external benefit of derivatives markets to a hedger or anyone else for any reason, has absolutely NOTHING to do with the concept of zero sum. The point you are attempting to make about a losing participant in the futures market benefiting from something external is moot to be kind. It has zero relevance to the fact that in the closed system futures market, said player was a loser. What about this is difficult to understand? What the participant did outside of the futures market makes no difference. Beneficence, monetary or otherwise CANNOT be included in the definition of zero sum. Period. By your misshapen logic, the following ridiculous scenario would make derivatives positive sum: I bet a buddy that if I lose on my next futures trade I get to sleep with his wife. Losing here sounds like it has a fringe benefit to me, however it has no bearing on the fact that I lost my trade within the closed system futures market. Hell, it may be worth losing the money in this instance if she looks good enough, but does it change anything about what the derivatives market sees? Do the derivatives markets care if you scrood your buddy's hot wife? NO. By the way, derivatives don't care if you hedged or offest your losing bet with stock, options, or corn either. Your external benefit is irrelevant; no less than my ludicrous wife example....
-------------------------------------------------------------------------------- Quote from Buy1Sell2: Within the confines of one particular futures market, it is a zero sum game I am asking everyone please to stop posting to this retired thread. The short statement you see here is all that ever needed to be said on the subject. Thank you in advance for ceasing.
so saturnine thinks it stupid to define benefit beyond pure accounting, here is what a finance professor says: http://www.turtletrader.com/zerosum.pdf My adobe will not allow cut and paste so i will paraphrase: p. 5: "Several important implications flow from whether trading is or is not a zero sum game. The classification depends on how broadly we define profits and losses of players. " read page 6-7 as to why poker can a positive sum game game. read page 10-11 as to why you can make a case for trading as a positive sum game. In summary if people didn't trade for external benefits then the game simply would not exist. To ignore these external benefits when analyzing the markets as a game is really sort of stupid then. Also note that all cash transactions could be classified as zero sum if you only did money accounting. If i buy an ipod from you for $50, but its 'market value' one hour later is $49 you would call me a loser. But that would ignore many factors such as maybe i didn't want to wait (how could I have known anyway?), maybe obtaining it sooner meant that I could do something more productive in the meantime. It would be pretty stupid to label all sellers who didn't sell at the top and all buyers who didn't buy the low as losers, but that's pretty much what is happening here. If a farmer sells his crop in the silo one month early in the futures, and then the price rises, you call him a loser since his account was debited. That totally ignores that the reality is that he may not care, and to him he won the game by off loading his crop when he chose too. He didn't LOSE money, he simply didn't sell at the top and his futures position is itself an offset to a physical. When he sells his crop the profit will more than offset the futures losses.