Zero Sum Game???

Quote from Swish:

For the life of me, I don't see why people are so committed to calling trading a "zero sum game"......

Or "worse than zero sum" due to commissions, etc.

If the market had a total fixed value, then yes, I would be convinced it is zero sum - BUT clearly it is not. Because of the longer term appreciating characteristic of the market, then (theoretically), a single share of stock could be historically owned by successive folks who each made money on their ownership - hence it's not zero sum.

My gripe on the whole concept is naysayers who throw potshots at the daytrading industry.

Has anyone ever seen a serious discussion of the zero sum game on this board, in a magazine, etc.????

Thanks,

Swish
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I think its important that traders understand the basics of the "zero sum" concept as another sobering reminder people are ready to kick your ass and take your money and that money does just not go to "money heaven". Options and futures are probably more pure "zero sum" plays than stocks are. The time taken to debate and vision how more pure zero sum they are relative to each other could be better spent.

Along that line of a sobering slap in the face, people ready to take your money, etc is an article I read a while back....here is a link.

http://www.turtletrader.com/zerosum.pdf

No, its not a turtletrader document, although the link was there. It was written by a USC professor, all in all a pretty good read.
 
Hi, OddTrader, if you take my Friday DOW example the sum of the gyrations is 170 and net day trend is 10 down Open to Close(very approximate figures). So the multiple is 17.
 
Quote from Cheese:

Hi, OddTrader, if you take my Friday DOW example the sum of the gyrations is 170 and net day trend is 10 down Open to Close(very approximate figures). So the multiple is 17.
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How is this multiple related to "zero-sum"? :confused:
 
Simple Equation

FGL=futures gains on longs
FGS=futures gains on shorts
TFG=total futures gains

Also keep in mind that FGL=FGS*(-1)


SGL=stock gains on longs
SGS=stock gains on shorts
TSG=total stock gains

Also keep in mind that SGL<>SGS

FGL+FGS=TFG=0 Therefore futures are ZERO SUM

SGL+SGS=TSG=X Therefore stocks are NOT ZERO SUM

X does not equal 0

To be a ZERO SUM GAME the equation must equal 0 AT ALL TIMES. Whereas in reality, even if the stock market stops trading or even drops to zero the equation will not equal 0.:D :D :D

This is really quite simple. It has absolutely nothing to do with value only price.
 
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