If you really want to make money via trading, learn how to do insider trading without getting caught. Everything else is hogwash.
Why are you proud to be a trader?
- Thread starter icetrader
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Wealth is not money, money can be exchanged for wealth given by the currency's current percieved worth, but once that faith is gone then you can forget it. In 1863 you may have been able to buy a farm with confederate dollas, in 1866 you could not even though the farm still represented relatively the same wealth.
There is absolutely no such economic jobs principle you have defined here, but in that example everyone still makes money except for one. In most regulated trading markets there must be people who lose money.
We are self interested market middle men looking to take money from the other participants, you have not proven that producers and end users are better off with most of us around. It may be true, but you have not proven it.
Wow, you really miss the forest for the trees, eh? While the money/wealth distinction is useful in general, in the context of this debate (salaries for individuals competing in the job market) it's pretty useless. Do you hear anyone ever asking their employer to pay them in "wealth" not "money"? I even debated with myself while making the original post over whether I should use "wealth" rather than "money", although I used money because (as your own example clearly implies) for the most part in the short-term and absent some external shock like a Civil War, the two are synonymous. Again, very tangential to the original point.
The "economic jobs principle" (not my terminology, yours) I'm talking about is actually opportunity cost. In the labor market example, the people who do not get the job I get and who then have to take lower-paying jobs have "lost money", analogously with the trader on the losing side of a transaction. The reason is because in both cases, a competitor with better skills has forced them into taking less for their asset (either a tradeable instrument or their labor) than they wanted to. Are you going to deny that people are sometimes forced to take jobs for less than they wanted? How else would you portray the gap between what they wanted and what they got, if not as a "loss"? Is it the exact same thing as a trading loss? No, that's why it's an analogy, meant to illustrate that in a competitive economy, there are "losers" all over the place, so singling out trading as an activity uniquely filled with "losers" is incorrect analysis. Again, I can see this pretty clearly at play and if you can't, I can't somehow magically give you the ability to do so nor do I particularly care if you ever develop the ability to do so on your own. You come across as pretty closed-minded and pedantic in general, so I wouldn't expect that you'd be open to considering a situation in a different light than how you'd typically view it.
As for "proving" that middle men add value, it's pretty much a given in my world, since there has never been a functioning economy without middlemen and the likelihood of there ever being one is approximately zero, by my estimate. As for the specific value added by traders as middlemen, others have posted them in this thread (my particular favorite is risk transference, but there are many others posted as well). Again, you may not be convinced that these activities actually add value, but, guess what? The rest of the world is convinced and these activities continue. So, clearly, the one with the unconvincing case is you. "The dog barks, but the caravan moves on".
Well no, since I made the original post that you responded to, then I could better say you are the one missing the point.
Did I ever hear of someone asking to be paid in wealth and not money? yes I have, I have seen people compensated in all kinds of ways.
You don't seem to know what my original point was, how would you know if something is tangential?
Opportunity cost pertains to individuals and their choices, if you got the job then they don't really have the choice.
This isn't hard but you cannot seem to grasp it. In trading the lost money is actually deducted from your account. You had the money then you lost it. In your jobs example the people never had the money in the first place. Far different than opportunity cost.
no, in trading the competitor takes an asset away from you, you don't get 'less for an asset'. In labor you get paid a positive sum no matter what.
you answered me asshole, no one was clamoring for your opinion. You come across as a pedantic prick.
logic man accusing others of being pedantic- good one!
Wow, so some crank friend of yours demands to be paid in "wealth" and that suddenly becomes the normative standard for terminology in discussing labor markets? Good grief, you really do live in your own head vs. reality.
Your analysis of opportunity cost is pretty superficial and the rest of your post is just a "I know you are but what am I?" type of childishness unworthy of response.
Good luck with your quixotic quest to rid the world of non-value-adding (in your mind) middlemen!
No, I never said it is the normative standard. I was answering your question "did you ever hear of anyone?..."
take a logic class man
You are first with the ad hominems and then call others childish.
You do not understand that opportunity cost must involve actual choices.
When I post in a forum it is a 'quixotic quest', when you post it is of course something better.
Good luck to you too, you need it.
man, what a complete jackass
You're ignoring the obvious. And your reading comprehension is terrible.
Commercials are pro's. But markets with strictly commercial participation are far less liquid, and thus, much easier to manipulate. By their very nature, commercials act to inflate prices, especially when they control distribution. History has demonstrated this quite well. Speculative participation increases liquidity by 10-20 fold, thwarting one side or a cabal from heavy manipulation or cornering any particular instrument. Is that so difficult to understand?
True value is not one absolute data point. True value is a range or band of data points that reflect "fair value", according to collective market intelligence that has discounted all knowns and unknowns. The general premise being there are tens of billions of dollars (if not hundreds) in open interest (or longs and shorts) in any liquid instrument whom obviously have much more at stake than the average piker. The true value range is then determined by the averaging out of all moneyed opinions on the direction of the market.
In my opinion, the range of true value is roughly ~3% +/- current market price. Meaning, if all fundamental conditions were held static right now, price would vary in a 6% range around current price. The variance is attributable to short-term speculators who play technical games to run stops, and thus, bang price around. Deep value investors who swing big lines act as the referee of sorts, and buy below or sell above the ~3% variance, keeping prices within the band.
This does not mean to imply the range of true value is never breached in speculative markets. NO! It means speculative markets are far less prone to distortion RELATIVE to commercial markets. Specifically, the magnitude and frequency of extreme distortion is far less common in speculative markets relative to commercial markets. Please focus on reading comprehension. This is the third time I've stated the distinction is relative, yet you continually imply the relationship is binary or absolute.
Because distortion exists in our current market, astute traders can identify when prices have fallen outside the range and buy or sell accordingly. All manners of fundamental information is used for this purpose. Within the range, us short-term specs rely on technical and price action to identify points where longs or shorts are caught, and run stops. Opportunity abounds. You must apply yourself to find it.
As for the rest of it, academics and economists know far more about the market then you. That you can't even address one benefit of speculation shows how vapid your argument is. You repeatedly ignored my explanations in favor of building strawmen and nitpick over semantics, as if that proves anything. Try rebutting with an actual, cogent, logical argument.
Using your own logic and assume your 'true value' exists... commercials are 'market pros' therefore the commercials know when price is distorted. There are commercials on both sides of the market, therefore if a seller knows prices are 'too high' they will sell.
Why the frak would some commercial sit on the sideline if they know prices are distorted from 'true value', why would anyone?
You really are something else, you and that other guy. You invent a nonsensensical term supported by a circular argument, then arrogantly defend it like religion.
1) "If fundamental conditions were static" -
News flash: they aren't. They change with time, it's called the real world. You have not defined them anyway, and you are using the very old and debinked idea that markets actually achieve equilibrium. Name one market in the last month where the bid/ask spread vanished and there were no unmet limit orders.
2) "True value is a range or band of data points that reflect "fair value".
News flash #2 fair value is a subjective term that cannot be quantified, Marx tried that long ago. Again, dubunked and discarded by more advanced thinkers.
3) In my opinion, the range of true value is roughly ~3% +/- current market price. Meaning, if all fundamental conditions were held static right now, price would vary in a 6% range around current price.
You gotta be kidding, you pull 3% out of your ass just like that? Well rather than repeating the obvious that I have explained before, i.e. this is a circular definition and contradictory set of ideas you put out, I'll make a simpler example that maybe you can follow. If you can't then I'll just forget about trying to teach you anything.
You said yourself that markets can be distorted from true value, but then you define true value as +/- 3% of current market price . Well guess what, it impossible for the market price to be anything but current market price. If you see your folly and now want to compare market prices at two points in time, you still have a logical contradiction. If the market at time t1 is distorted by 4% from what you call the middle of your true value range defined by price at some other time t2 (that you think this can happen is evidenced by your own statement from a previous post "Does it make sense to price oil at 500 dollars a barrel when it's true value is 50 dollars?") , then the price at t1 (say $500 dollars) which was 'current market price' at t1 did not define the true value at t1 (which you say was $50). That is in contradiction to your own definition: the range of true value at t1 is roughly ~3% +/- current market price at t1. I inserted t1 for clarity. QED
LOL
...and only people like you are astute, gosh you must be a billionaire. why are you here?
I have read them, no they don't. What a lame appeal to authority, we all know economics is a pseudoscience.
Oh yes, much better to be like you and make up crap to help yourself feel better. The HFTs, the Hunt Bros., the big manipulators... they all have the same legality and legitimacy as you do. You are not some sort of great equalizer, you are simply somebody trying to make a buck. I never claimed speculation should not exist or never has benefits anyway. Please read for content.