4 ms·
If the market is a zero sum game, then for every winning trade, there must be a losing trade. Obviously some teams must be winning consistently, which implies t
by etep 9y ago
If the market is a zero sum game, then for every winning trade, there must be a losing trade. Obviously some teams must be winning consistently, which implies that some are losing consistently. This says that the consistent losers go out of business. So who are the winners going to trade with? By contradiction, it is not zero sum.
- vageli 9y ago> Obviously some teams must be winning consistently, which implies that some are losing consistently. That does not necessarily follow; markets are not static and players are free to enter and leave.
- etep 9y agoPeople like to say the market is a zero sum game, but I have always been suspicious of this truism. Its fair to say that participants can leave the market, but in practice that isn't what we see. In practice there are firms doing this trading, and they are staying in business, and obviously making money. Are they fleecing the little guy then? This explanation falls flat for me, i.e. for the amount of money they seem to be making, it would take a lot of small time participants losing everything every day. Most people I know aren't even active traders. So why is it an accepted truism that the market is zero sum?
- sidlls 9y ago>Are they fleecing the little guy then? Yes, more or less (although that's just one way they make money, and probably not the most lucrative) And fortunately for them there are plenty of "little guys" ready to enter the market on a regular basis.
- etep 9y agoMy point exactly, not the most lucrative. So what remains is the implicit assertion they are fleecing the big time guys. And somehow the big time guys remain in business... so what's going on?
- jacobr1 9y agoThe missing puzzle piece here are dividends. Sure some people buy high and sell low and thus take a loss. But the market as whole can increase in value due to the external growth and profit.
- MR4D 9y agoNot quite. You need money to enter. Which was the parent poster's point - eventually, the losers will all be gone and there will be nobody left to trade with.
- branchless 9y agoNew suckers. Also a zero sum game doesn't mean one side always winning.