zero sum game?????????????

Wikipedia: zero sum game
Zero-sum describes a situation in which a participant's gain or loss is exactly balanced by the losses or gains of the other participant(s).

It is NOT a zero sum game, if not all participants are interested in the same class of gains.
A participant happily paying for entertainment or for "learning" theoretically brings additional, non-tangible gains into the equation.
Likewise a commercial trying to offset non-market risks (e.g. a gold miner hedging against liquidity risks).

A company launching an IPO is (through the mechanics of asymmetrical information) automatically forced to sell at a price under their own perception of value ( if they're not fraudsters).
Anyone remembers the initial offering price of google?
A theoretical player in a hermetic zero sum game should have waited until someone had offered at least 200 or 300$ before selling the first share.
For liquidity and credit risk reasons that did not happen. That's a textbook example of external gains, without any game-internal offset.
To be fair: external gains could be quantified for every single market and weighed against transaction cost. The result should be an expectancy that is skewed slightly to the positive side for the theoretical, unbiased player possessing equal information compared to competitors. A situation, that is very close to the zero-sum game.
It's really, really old stuff in economics...

 

Trading is a Zero Sum Game, investing is not! You guys are constantly mixing the two together.

 

Not to change the subject, but did you know that there was some random person talking about you a few weeks ago?
http://www.elitetrader.com/vb/showthread.php?s=&threadid=65182&perpage=40
This is the first time I've seen you post since then...just thought you should know.

 

trading is NOT a zero sum game. because the trading INSTRUMENTS (assuming you don;'t limit yerself to futures/options) are not zero sum

futures and options are zero sum

equities are not

( i say this as somebody who does 90% of his volume in futures)

 

I respect you a lot, nevertheless that is simplified, sorry.
It is one dynamic system and it is subject to the laws of thermodynamics.
If participants rationally can expect gains (monetary or external) they behave accordingly.
In practical terms: their perceived hurry will lead them to trade at prices away from short-term equilibrium. Thus each lower time frame might profit from exits and entries of a larger one.
The effect could be felt in a diluted form throughout the system, even in futures and options.
Of course that's pure theory, because it ignores the asymmetrical information effect.

The uninformed trader faces a zero-sum game with negative expectancy. If you want to know more about the different types of informed traders read Lawrence Harris.

 

Thanks. It was some idiot. Not worth even mentioning. This world is full of wacky people!

 

Good point. I was just trying to simplify the difference between the trading and investing.

 

I fell for it, I followed the links above (pretty slow trading day, eh?).....

http://cashflowheaven.com/freebookoffer.asp

"Cash Flow Heaven" - geez, now I have to add yet another group to my "Beyond the Snake Oil" reporting, LOL.

(I know nothing of these people, don't take me too serious this time)...

Don

 

Here is three zeros for ya bittrend, were you on the other side of this all day?

 

You keep dreaming. LOL.
I wonder about your credibility!!!
Stop lying to yourself, this is the only way to become successful.