X-trader Pro
- Thread starter MarkHyman
- Start date
Bryan Roberts
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hey, thanks for the info...i'll check into it. i have heard of these guys before but wasn't sure if they did stocks.
Sorry, but I didn't mean to offend. But consider this: unlike the stock market, where lasting wealth is created by the appreciation of securities, and which gives all participants the opportunity to gain, derivatives truly are a zero sum game. Derivatives are manufactured out of thin air and only exist for a predetermined amount of time, so at the end of that time, someone has to pay. Either the person who bought the option loses, or the options writing firm loses. Understandably, the options writing firms are not in the game for altruistic reasons, and the ones you will find to deal with generally price their derivatives correctly, and on average, they end up winning. Certainly, if the options writer were not competent, bankruptcy would soon result.
Companies whose sole business it is to price options devote lots of bright people and computer power to getting it right, or they will go out of business. Is anyone really going to catch them on a consistent basis for years?
Using derivatives can give you great leverage if you buy a call or put to go long or short a security. However, the time value in the option price is always ticking against you, so you are really betting not on the price of the security but on the pricing of the option as defined by the options company you are dealing with. Volatility, time to expiration, and other factors will determine the price of the option itself. As a zero sum game, derivatives really do favor the big guys over time.
Interestingly, the best analysis of the success of derivatives trading comes from the commodity markets, and year in, year out, it is those who are hedging positions in real commodities who make the best bets in the derivatives markets.
Trading individual securities, in which you can eliminate the spread on at least one side of the transaction (either the buy or sell) and avoid paying for time value, significantly increases your opportunity to make profitable day trades.
Oh, My god! But how about the depreciation of securities? And I think you buy-and-hold-to-death(or delisted) and never take profits by selling stocks with price higher (with all dividends etc. taken into account) than when you bought them? If ever, who is to pay?
Don't know what you are talking about. But the last sentence "significantly increases your opportunity to make profitable day trades. ", do you mean "make profitable day trades"? Am I misinterpreting you? Not good in English. But if in a short-term/daytrade time frames, is it that important the "time value"? What has to do with the "appreciation of securities"? And do you think it's a zero-sum or non zero-sum game? Or is it that important to distinguish between them, a game is a game is a game?
Lasting wealth is created by appreciating securities. Obviously, the opposite is also true. In general, everyone pays when securities depreciate.
The last sentence is exactly what I mean: make profitable day trades. The time value is not a significant component in intraday trading as it is with derivatives. The stock market is not a zero-sum game. I was making a comparison to show that in derivatives, either you win or lose. Both parties can't win unlike in the stock market (if stocks appreciate).
The last sentence is exactly what I mean: make profitable day trades. The time value is not a significant component in intraday trading as it is with derivatives. The stock market is not a zero-sum game. I was making a comparison to show that in derivatives, either you win or lose. Both parties can't win unlike in the stock market (if stocks appreciate).