Zero-sum game.

[TiffanyTrades]

How about this argument.

Editor's note: I am not a REAL TRADER in that I think I have completed 125 trades over my lifetime, and my total profits of $800.00 in two years would not support an LA homeless person, LOL.

I am a reporter who has been following the "trading business" for the last 10 years.

I have interviewed over 2,000 traders, trading room gurus, CFTC attorneys, defense attorneys, trading gossip rooms etc. Have enough notes to write two books and maybe a movie script, LOL.

Here is my analogy regarding the "zero-sum" debate. Steve Wynn runs casinos. Lots of people lose. But many win including Steve, at the top of the list. But 7% of gamblers do win, almost as good as the 10% of daytraders.

Others who win are gambler education sites, card dealers, waiters, bartenders, celebrities who perform, and the extra cops who get overtime.

Question for the masses here. Should guys and gals who write books on "beating the black-jack dealer" be called cons? Should they be prosecuted?

There are hordes of people on this site and elsewhere who attack the "TRADING ROOM GURUS" who publish their trading methods and run chat rooms.

Why are they attacked? Most of them post warnings about how risky gambling . . . oops . . . daytrading is.

Should not the gamblerholic newbies who want to make only $200 per day on a $5,000 account be required to get mental help?

TT

 

[ironchef]

They only do so because of the interaction with the asset market - i.e. without an ability to collapse the arbitrage relationship, the two could be wildly disconnected.


Nope. An asset either already produces income or is expected to do so in the future. So when you are buying an asset, you are interacting with the real economy. That interaction makes the asset market a non-zero-sum game.

A zero-sum game by definition has the total expectation across all participants equal to zero. It's pretty easy to see how that is not true with assets - this is not my theory, it's economics 101.

Is Gold an asset?

https://www.elitetrader.com/et/thre...-trade-of-century-says-one-hedge-fund.331067/

 

[Mr. TNA]

Zero Sum? - Party #1 sells me a security for $10.50 he purchased an hour ago for $10.00. I sell the same security to party #2 three hours later for $11.00. Party #2 has a longer trading time frame and sells the security for $15.00 six month later. If all three people made a profit, how does this zero sum game theory apply?

 

[LS1Z28]

Stock prices are driven by supply & demand. If a stock's value goes to zero, there are more losers than winners. If a stock's value increases 1000%, there are more winners than losers. The only way trading stocks would be considered a zero sum game is if they always returned to a baseline value.

 

[Woodrow97]

Stock prices are driven by supply & demand. If a stock's value goes to zero, there are more losers than winners. If a stock's value increases 1000%, there are more winners than losers. The only way trading stocks would be considered a zero sum game is if they always returned to a baseline value.

Anyone here remember the 70s-80s where the SPX went nowhere in a decade but market neutral funds returned +3500% in the same period?

 

[Overnight]

Zero Sum? - Party #1 sells me a security for $10.50 he purchased an hour ago for $10.00. I sell the same security to party #2 three hours later for $11.00. Party #2 has a longer trading time frame and sells the security for $15.00 six month later. If all three people made a profit, how does this zero sum game theory apply?

It is a curious question, because the person you just "sold" that security to for $15.00 may have sold it at a way higher price, say $20, and is now covering his short and also makes money by buying it back at $15. So you both made money on the trade. The zero-sum issue is really bunk, because it doesn't MATTER.

When I look at my charts, I do not see people making or losing money. I just see the price. I do not think of individuals profiting or losing on the other side, because one can never know.

 

[SimpleMeLike]

I've seen it mentioned in a negative way that trading is zero sum game, that in order to win someone has to lose. I don't agree with this for two reasons.

First of all, not every win is a direct loss. You may be buying from someone who is closing out a profit, or selling to someone who is buying for the long term.

And secondly, this is no different than success in any profession. If someone is looking for a plumber, and they see your ad on Google instead of a competitor's, that means you took profit that they would have had. Everyone is competing.

In plumbing, those that advertise well, have competitive pricing, and good service, win the money. Those that are not as good lose, or make less.

So too in trading, those with the correct systems, approach etc. win the money. Those with ineffective systems and impulses lose.

I don't see how it's any different, or something to feel guilty about.

Risepoint1879,

Some will win at this trading game and some will lose.

 

[TommyR]

whilst i agree with some of the learned points. i strongly feel the non-zero sum utopia in which everyone wins is greatly exaggerated.

 

[Risepoint1879]

Zero Sum? - Party #1 sells me a security for $10.50 he purchased an hour ago for $10.00. I sell the same security to party #2 three hours later for $11.00. Party #2 has a longer trading time frame and sells the security for $15.00 six month later. If all three people made a profit, how does this zero sum game theory apply?

It doesn't always apply on every trade. Another reason for it to not be used as a negative of trading.

 

[Overnight]

...
Editor's note: I am not a REAL TRADER in that I think I have completed 125 trades over my lifetime, and my total profits of $800.00 in two years would not support an LA homeless person, LOL...

P.S. Don't sell yourself short. You traded with real money, then you are a real trader. Don't let anyone else tell you otherwise.