4 ms·

You are aware that trading is a zero-sum game and that for every winner there's a loser who took the other side of the bet?

leetcrew 6y ago
this is sort of a simplistic take. not everyone has the goal of making money on every single trade. say I buy some security from you, not because I expect it to go up, but because I believe it is uncorrelated with my other holdings. you realize a capital gain, and the value goes down the next day. did I lose? not really; we just had different goals. edit: maybe a better example. I am confident in $SPCE over the next six months, and I want to open a long position. I want to slightly reduce the risk though, so I also buy an OTM put from you. $SPCE keeps going up, so the put expires worthless. we both won here. you collected the premium and I got into a long position that I wouldn't have otherwise.
andi999 6y ago
Short term yes, long term no.
- ivanche 6y ago
  Care to elaborate? Are you saying that long term every trader makes money?
  - syrgian 6y ago
    Long term non-trader money is also part of the market (stock buybacks, dividends).
  - andi999 6y ago
    These stocks represent part of existing companies. If these companies do well the stockholder will/might receive extra dividends. So if you have stocks of a single company then you will make money in the long run if the company does well (and vice versa). Generally people do not trust a single company, so if you diversify (different strategies apply here) you can make your outcome dependent on a countries economy or the world economy (if the world economy does well, your portfolio will do the same)
    - ivanche 6y ago
      Oh sorry, I wasn't precise enough. I meant specifically forex traders (because the article was only about forex traders). Since currencies are not cash-flow producing assets, I don't see how, on average, everybody can end in the money. About stocks I absolutely agree - history tells us there's a long-term positive (US) market return so it's clear that an average investor should get exactly that return minus costs/fees.
      - andi999 6y ago
        This is a good point. One could argue that some people buy currency on forex to use it for a different business which gives them a gain. So your selling benifits them and you.

leetcrew 6y ago

this is sort of a simplistic take. not everyone has the goal of making money on every single trade. say I buy some security from you, not because I expect it to go up, but because I believe it is uncorrelated with my other holdings. you realize a capital gain, and the value goes down the next day. did I lose? not really; we just had different goals. edit: maybe a better example. I am confident in $SPCE over the next six months, and I want to open a long position. I want to slightly reduce the risk though, so I also buy an OTM put from you. $SPCE keeps going up, so the put expires worthless. we both won here. you collected the premium and I got into a long position that I wouldn't have otherwise.

andi999 6y ago

Short term yes, long term no.

ivanche 6y ago
Care to elaborate? Are you saying that long term every trader makes money?
- syrgian 6y ago
  Long term non-trader money is also part of the market (stock buybacks, dividends).
- andi999 6y ago
  These stocks represent part of existing companies. If these companies do well the stockholder will/might receive extra dividends. So if you have stocks of a single company then you will make money in the long run if the company does well (and vice versa). Generally people do not trust a single company, so if you diversify (different strategies apply here) you can make your outcome dependent on a countries economy or the world economy (if the world economy does well, your portfolio will do the same)
  - ivanche 6y ago
    Oh sorry, I wasn't precise enough. I meant specifically forex traders (because the article was only about forex traders). Since currencies are not cash-flow producing assets, I don't see how, on average, everybody can end in the money. About stocks I absolutely agree - history tells us there's a long-term positive (US) market return so it's clear that an average investor should get exactly that return minus costs/fees.
    - andi999 6y ago
      This is a good point. One could argue that some people buy currency on forex to use it for a different business which gives them a gain. So your selling benifits them and you.