Is it possible to earn on a life working on forex

[milktruck]

Quote from cabletrader:

Imagine everyone had to stop trading right now and liquidate their open trades, would everyones gains and losses equal zero (or less than zero)? No.

I dont see how you have come to this conclusion.

Im not trying to be a dick, but it seems self evident to me that the answer to that question would be yes. Actually, the question would be whether or not there has been any change in the amount of capital out there, since the only desired outcome of the game is more money. If there are nonzero scenarios playing out, there would be more or less money in the pot just from trade. Where is extra money coming from? Where would it go?

The only way capital leaves the system is commissions, which are even charged on spot above the retail level. Forex cant be a positive sum game, only slightly negative.

Maybe think of it this way. Every buy is also a sell to another party. Eventually somebody has to get the short end of the stick and top tick that long.

 

[Gringinho]

cabletrader,

if you take the currency trading system and project towards infinity of time, it will converge to a zero-sum game. In reality, we know that the system and maybe any of the currency will be replaced or cease, as well as the possibility of the instrument or exchange to cease. Therefore it is absolutely certain that it will converge towards zero-sum.

 

[cabletrader]

I guess I'm in the minority as I still don't believe it's zero sum.

Here's my ace......don't forget only a small percentage of transactions made in the market are speculative (where the desired outcome is more money), the bulk of transactions are for practical purposes....if nothing else that alone makes it non zero sum.

 

[RapidFireFX]

Quote from milktruck:

I dont see how you have come to this conclusion.

Im not trying to be a dick, but it seems self evident to me that the answer to that question would be yes. Actually, the question would be whether or not there has been any change in the amount of capital out there, since the only desired outcome of the game is more money. If there are nonzero scenarios playing out, there would be more or less money in the pot just from trade. Where is extra money coming from? Where would it go?

The only way capital leaves the system is commissions, which are even charged on spot above the retail level. Forex cant be a positive sum game, only slightly negative.

Maybe think of it this way. Every buy is also a sell to another party. Eventually somebody has to get the short end of the stick and top tick that long.

You have to look at it this way, yes it is zero sum in a bubble. But the 2 parties need to be in perfect timing alignement.

If it were just you and me in a room trading against each other, athe end of the day whoever lost is the gains to the other person.

In FX trading, whether the broker hedges the trade or keeps it themselves, you aren't their only client so their exposure is multilevel.

Say for example, you short EURUSD at 1.4235 and the broker does not hedge. A minute later, someone else goes long EUR (for the same amount as you) at 1.4230, yes he lost to you and now he is "hedged" or flat for exposure. A minute later someone else comes in and goes long same amount of EUR at 1.425. He is now short himself but then you go flat at 1.4220 which puts the broker long.

But one big thing is being omitted here, SPREAD. If the broker had a 2 point spread on at all times, he actually pockets money throughout the whole process.

Point is it is not zero sum, traders pay bid/ask spread, hence broker always keeps something. You make "win" or they may "win" none of it really matters.

What really matters is that you win, plain and simple. Focus on that, winning, and you will be fine. Worrying if some broker just made $10 off you and you will never amount to much of anything.

Adios

 

[milktruck]

the buy at 35 was a sell at 35 for the broker. when the next client sells the broker is taken out of his position for a winner and client 1 is down. at this point, every tick up benefits client 1 and every tick down benefits client 2 equally and the dealer is flat. forget the spread its irrelevant, all that matters is buys, sells, and price.

no matter who takes the broker out of this exposure or when, the net will always be zero sum barring commissions.

When you are trading fx you are not minting money. Clients taking other clients out of positions for the dealer where everybody wins is a story you can tell until it ends, and somebody ends up with a big losing trade to offset all the others.

 

[cabletrader]

Quote from RapidFireFX:

You have to look at it this way, yes it is zero sum in a bubble.

I think that is where the confusion and misunderstanding comes in, a lot of people imagine that trading forex with their marketmaker is somehow insulated and therefore competitive for a finite pot (ie winners winnings must equal losers losses), it's not.

 

[cabletrader]

Quote from milktruck:


no matter who takes the broker out of this exposure or when, the net will always be zero sum barring commissions.

milktruck, I can't believe you're still arguing the point.

Only a small percentage of participants providing liquidity in the forex market are currency speculators. The pot does not remain constant. For every winner there does not need to be a loser.

Those facts alone make it non-zero-sum.

 

[4XQs]

Agree with cabletrader. Currency pairs move not because of speculation (alone), but because of interest rates and the health of the economies involved.

If you want to look at it as zero sum, then the other side of your trade is the taxpayers, government, real estate market and corporations belonging to that economic area.

And the struggle to achieve economic growth whilst balancing political agendas is neverending - sometimes you're ahead and sometimes you're behind, measured against another currency.

Does this make sense?

 

[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.

 

[milktruck]

Quote from cabletrader:

Only a small percentage of participants providing liquidity in the forex market are currency speculators. The pot does not remain constant. For every winner there does not need to be a loser.

Those facts alone make it non-zero-sum.

There is ALOT of speculative money in the marketplace, not a small percentage. Non speculative money is not dumped on the market without discretion, everybody is a trader.

If you must add money (the desired ends) to the pot to create win-win scenarios, this implies it is not zero sum.

Do you want to feel like you are doing some good in the world or something? Why are you clinging to these absurd beliefs?