Judging by your user name, you like forex. If you and I take opposite sides of a currency trade, then one of us is likely going to lose. We may have different time frames, but across all of the various players, it will be a wash in a zero sum game. Therefore, in those markets that are zero sum, the losers finance the winners. In the general scheme of things, against this background and for all practical purposes, the losers must substantially outnumber the winners if those winnings are to be meaningful. It's simple arithmetic.
Why do 5% of Traders Win?
- Thread starter oldtime
- Start date
Of course. But it's naive to think that huge profits of profitable speculators come from losses of poor retail wannabees blowing up their accounts.
Such a game would be not worth the candles.
That was my point: economy in general feeds the markets with the money through many ways, losing retail traders are negligible factor from that point of view, because retail traders in general are only a small fraction of total volume in currencies and liquid derivatives.
P. S. I don't like forex. I just trade it.
If the hedger lost on the trade, he still lost on the trade, hedging strategy notwithstanding. The initially potential, and now realized, loss on their hedge trade was the price they willingly paid for certainty. Yes, the hedger lost on the trade. That loss served as an insurance premium, but it was still a loss in the market on that trade. Both parties may feel they're winners from different frames of reference. But one side of the trade lost nonetheless.
I'm not suggesting that all "winners" always remain winners. The composition may morph and change, but to the extent that some players continue to do well on balance, it will be at the cost of those who lost against them on balance in the zero sum component of the markets. Could a statement be any more obvious?
Sure. That's exactly what I said.
Just this thread is about the different kind of "losing", if I state it correctly (I probably don't and that's why you disagree with me).
Losing in the sense of this thread is being some guy who funded an account with $10K and losing it. My point was that winners' profits don't come from those particular retail traders pockets mostly, but from other sources. Retail losers too of course, but they are just small part of the picture.
see, now I do like forex. In the old days when you traded wheat, at some point there was a day of reckoning when everbody had to settle up based on just how much wheat the earth could produce. But in forex, they just create product out of thin air.Quote from cornixforex:
Of course. But it's naive to think that huge profits of profitable speculators come from losses of poor retail wannabees blowing up their accounts.
Such a game would be not worth the candles.
That was my point: economy in general feeds the markets with the money through many ways, losing retail traders are negligible factor from that point of view, because retail traders in general are only a small fraction of total volume in currencies and liquid derivatives.
P. S. I don't like forex. I just trade it.