Is it possible to earn on a life working on forex

[cabletrader]

Quote from milktruck:

dude, you dont get it. I don know how else to explain it to you, and it isnt a matter of opinion, its a fact.

if you are taking your brokers money along with all the other clients on a platform, your broker better be a winner on his liquidity plus a few ticks or he is going out of business. his liquidity passes orders around in the same fashion. eventually the exposure rests with whoever wants to take the other side and not hedge off.

Think outside the bucketshop.

Yes, think outside the bucketshop! Think of market participants other than the minority speculators, not everyone's sole purpose for exchanging euro for dollars or dollars for yen is speculation!

I think it's you who doesn't quite get it but never mind

 

[cabletrader]

Quote from milktruck:

Why are you clinging to these absurd beliefs?

Funny, I was going to ask you the same thing, because all you base your argument on are beliefs and not facts.

Let's agree to disagree eh, some things just aren't worth arguing about

 

[Gringinho]

It really boils down to if you see currencies as an isolated system or not. Currencies ultimately reflect the economy and worth - so it is not isolated from growth fluctuations.

Trading itself as a system is isolated. Trading currencies is different from trading stocks in that there is a counterpart to the currency trade. That means that trading currency is essentially a zero-sum game. But the currency system itself is not zero-sum.

The "piles of currency worth" fluctuates with economy, while the currency trades chip off these piles or add to them. With stocks there is one "pile" reflecting a company's worth - not two piles like in a currency pair.

 

[cabletrader]

Quote from Gringinho:

That means that trading currency is essentially a zero-sum game. But the currency system itself is not zero-sum.

Can you separate the two, I don't think so, the system services both speculator and non-speculator and can't differentiate between the two, it's all just liquidity.

 

[Gringinho]

cabletrader,

currency exchange and currency as a reflection of an economy are two different systems. They interact as economic outlook affects currency pairs in the exchange system. The key is that it is paired and therefore always has a counterpart - i.e zero-sum game.

 

[cabletrader]

Quote from Gringinho:

cabletrader,

currency exchange and currency as a reflection of an economy are two different systems. They interact as economic outlook affects currency pairs in the exchange system. The key is that it is paired and therefore always has a counterpart - i.e zero-sum game.

Domestic value (inflation, or local purchasing power if you will) of a currency is a seperate issue even though it obviously affect a currency's exchange value. This is forex, the exchange of one currency for it's counterpart at the prevailing rate. That rate reflects the underlying economy of the respective currency relative to the counter currency (or rather how the market anticipates that economy will perform in the future seeing as how most expectations are priced in well in advance).

All that's irrelevant though.

The basic premise of zero-sum is "...a situation in which a participant's gain or loss is exactly balanced by the losses or gains of the other participant(s).....", which isn't the case in forex as only a minority of participants are speculators.

 

[Gringinho]

Quote from cabletrader:

Now you've lost me, in this context currencies reflect their home economy only by comparative value against other currencies , ie their exchange rate, domestic inflation wouldn't be relevant, but I don't see how it follows that forex trading is zero-sum or non-zero-sum.

Currency as a "value metric" - "worth" - reflects the economic reality represented by a nation/area. It can be pegged to e.g a commodity or basket of commodities. Bartering and production shows that an economy can change and not necessarily have to change using exchange rates of currencies. Trade using currency inside the area does not affect the worth of the currency - it is an isolated system.

A currency pair relates one currency to another through an exchange system. One single trade in a currency pair does change the underlying "worth" of the two economies themselves. E.g a central bank doing USD 1 trillion in a trade. The relations of currencies in an exchange system always involves two parties and is a different system than having a currency for an economy.

If you gain stocks of a company - the growth, production and fluctuations of that company reflects the value of the stock along with market demand for the stock. Therefore you can gain or lose something without others gaining or losing.

Through a currency pair - there are always a winner and a loser - even if only demand fluctuates and no trades are done - because it is relating two economies which "piles of worth" are fluctuating.

 

[cabletrader]

Quote from Gringinho:


Through a currency pair - there are always a winner and a loser - even if only demand fluctuates and no trades are done - because it is relating two economies which "piles of worth" are fluctuating.

Sorry, edited my post while you were writing that!


Domestic value (inflation, or local purchasing power if you will) of a currency is a seperate issue even though it obviously affect a currency's exchange value. This is forex, the exchange of one currency for it's counterpart at the prevailing rate. That rate reflects the underlying economy of the respective currency relative to the counter currency (or rather how the market anticipates that economy will perform in the future seeing as how most expectations are priced in well in advance).

All that's irrelevant though.

The basic premise of zero-sum is "...a situation in which a participant's gain or loss is exactly balanced by the losses or gains of the other participant(s).....", which isn't the case in forex as only a minority of participants are speculators, the vast majority of transactions are for practical reasons not speculation.

 

[Gringinho]

cabletrader,
no problem.

 

[cabletrader]

Quote from Gringinho:

cabletrader,
no problem.

You're right, no problem, and really not worth debating!

As long as we all get filled at the price we want and we all make some money then everyone is happy, the importers/exporters can paddle their own canoe just as long as they keep providing liquidity for us speculators