Best Thread Why do you think you can make money trading?

On short term timescales, the markets can be, essentially, considered zero sum. Some are precisely zero sum (most derivatives are, although it has to be noted that those that derivive from an underlying non zero sum market are not zero sum... or more precisely they are but there is a mean win of the risk free return built into one direction [and the converse] but you can consider them zero sum as with all other markets for short timescales).

So why do you think you can make money from these zero sum games - particularly when you are playing with other participants who can? I will explain why I know I can in a few days, but I make this post with the aim of provoking thought, so do go on and post...

i assume the general direction/trend will continue once i enter.

Pin bars ha ha :clap:

There are only three ways of making money... I think Cap'n Arab will offer the same exact answers to his own question.

because of kurtosis

Short term trading is zero sum but the markets don’t appear to be completely efficient.

Those who can make money have not saturated the market over all time frames.

Still a place for me at the trough it would seem.

What is your definition of short term timescales?

Jason

I can't understand your first paragraph at all.

I can just about understand your second, but it doesn't say a lot.


Perhaps I should stop trying to read forums (fora?) while under the affluence of incahol.


It's not a zero-sum game if you have even the slightest idea of what you are doing.

This is my last territorial claim in this particular region of "that faraway country of which we know little", which sometimes goes by the name of Trade 2 Win. (Win? - he must be joking ...)

Good question, I guess my answer would be having an edge that others either don't know about, don't understand or don't use.


Paul

It's not a zero-sum game if you have even the slightest idea of what you are doing.

Click to expand...

It is not meant in the context of an single individual, it is meant in the context of all those participating.


Paul

perhaps you re refering to having an edge?
either it is a strategy , methodology , system , luck , money , technology ...?
I starting to figure out that your trading style exatlcy mirrors the way you live your life, and the personality you hold. To change it, extremely diffcult but I heard - possible.
If thats true, that means that life is a zero-sum game too, but here you won`t know if you re winner or loser until the very end.

Trader333 said:

It is not meant in the context of an single individual, it is meant in the context of all those participating.


Paul

Click to expand...

OK, got you. Good point.

Trader333 said:

Good question, I guess my answer would be having an edge that others either don't know about, don't understand or don't use.


Paul

Click to expand...

Bingo! You win the little Pink Elephant sitting in the middle of the room that everybody wants to talk about.

I used to come on forums such as this (in fact, this was one of them) and talk about the earlier developments of my Edge. I don't do that anymore. Not necessarily because any Market Maker, FCM, Broker or Bank can target and eliminate my edge, but because it is very possible for Regulators to Regulate My Edge out of existence, or for my Intermediary, to Policy My Edge out of existence - thus, I don't talk with specifics about my Edge.

However, I will say this about Edges in general:

1) The best repeat themselves on a very high probability basis.

2) The best are often times the most simplest of concepts.

3) The best will often times (but not always) work in multiple time-frames or multiple bars of data.

4) The best will work consistently under any and all market conditions.

5) And, most importantly, no other market player, either buy side, sell side or execution side, will be able to target your Edge for destruction.

Those are the five (5) most critical component factors of a good Edge, regardless of the financial market you might trade.

One thing I will say about my Edge is this: It is Global in nature and Extensible at its core. Its extensibility throughout the world virtually guarantees break-even 99.99% of the time. The rest of the win ratio comes in between 90% to 62% of the time. Sum total: A net/net zero lose proposition approximately 98% of the time and I'll take that Edge to the bank.....every chance I get.

All that, with approximately 30+% of the Edges components losing money. Not a bad days piece of work down at the old wood mill, if you can get it.

TradSMART. :smart:

Well, speaking just for the world of options, there is a pool of money available from those who trade them strictly for hedging purposes. The intent in a hedge isn't to make money, but to minimize loss.
That means that if you're in it to actually make money, you can draw from that pool.
Similarly with fx, although having worked for a global commercial bank, who are the folks taking the other side of that trade, I do wonder about the sanity of retail fx traders. OTOH, I'm sure the Chicago options mm's wonder about the sanity of folks like me...

Benton D Struckcheon said:

Well, speaking just for the world of options, there is a pool of money available from those who trade them strictly for hedging purposes. The intent in a hedge isn't to make money, but to minimize loss.
That means that if you're in it to actually make money, you can draw from that pool.
Similarly with fx, although having worked for a global commercial bank, who are the folks taking the other side of that trade, I do wonder about the sanity of retail fx traders. OTOH, I'm sure the Chicago options mm's wonder about the sanity of folks like me...

Click to expand...

One of the ways to make money from the market is to let the market pay you for squeezing your beans...

...what I mean is, there are participants that are willing to pay a premium just to get the deal done (i.e. charging the hedgers a premium) - if you are sharp enough to be on the end of that deal, and you don't mind your beans being squeezed, the market will pay you for liquidity provision.

It's minus sum, not zero sum. Fees make it a minus sum game. If this was not the case, then there would be no money to pay for CNBC, MSNBC, Bloomberg, Brokers, exchanges etc. etc. Ultimately, this is all paid for from investors money.

In terms of what makes me think I can make money:

- In the very short term, being able to get a handle on buying/selling pressure, understanding some of the situations a market maker had his pants pulled down and needs to move the market to make up.
- In the longer term, recognising when someone is now holding something they don't want and buying it off them.

I make money in the markets due to my knowledge of the markets, instruments and market participants.I have a tested trading plan and tested systems/method that consistently extracts money out of the markets.

What chance has a small trader , when 1500 hedge funds blew up and even the likes of Goldman Sachs have closed hedge funds?Even Harvard MBAS have failed and some of the most intelligent and famous people like LTCM have failed.

http://www.ft.com/cms/s/0/cd9fbc74-06bb-11df-b426-00144feabdc0.html

Edge is an advantage over your competitors. If you are a retail trader or price taker, you have very limited or NO advantage over others.

I guess people here think of their 'edge' as the statistical advantage of a strategy, which is nothing but average return($) for a dollar invested in a trade.

The only people who might have an edge are working for big firms and have access to information that retail guys dont. Arabian may fall into this group...?....From reading some of his posts, i dont konw what he does, buy he seems to be able to make money pretty much risk free!

In fact, he may even work for a market maker? thats not 'trading' but very easy money i imagine
CMC and IG index have nice edge for example!

temporarilylight said:

The only people who might have an edge are working for big firms and have access to information that retail guys dont.

Click to expand...

This is inside information or access to knowledge base.Surely traders can have a similar edge by using t/a ,knowledge and a great trading method.