Rhody Trader
Senior member
- Messages
- 2,620
- Likes
- 266
I didn't say most traders are profitable. I said most trades are winners. MAJOR distinction.
Zero Sum Or Not? Does It Matter?
- Thread starter The Leopard
- Start date
- Watchers 7
I didn't say most traders are profitable. I said most trades are winners. MAJOR distinction.
The Leopard
Experienced member
- Messages
- 1,877
- Likes
- 1,021
enjoy your little break mate. If you could kindly let me know via multi-nic pm how you got the ban I would be grateful, my efforts seem fruitless.
I think the answer might be found here:
http://www.trade2win.com/boards/foyer/156902-new-policy-2.html#post1956138
DionysusToast
Legendary member
- Messages
- 5,965
- Likes
- 1,501
Zero Sum is one issue
Does it matter is sort of a separate topic that I would also call "can I benefit from it?"
So - for Zero Sum, here is how I see it:
Imagine a bunch of people standing around a bucket. They all have a cup of water each. Each of them will throw their cup of water into the bucket. Once that is done, they all wait for a whistle to blow. When it does, they will all attempt to take out more water than they put in. What is the likelihood that each of the players will succeed and take more water out than they put in? Exactly, it’s impossible.
Now, the markets may well be abstract, you cannot understand them completely any more than you can understand every trader in his PJs with his finger over the mouse. With that in mind, it's a bit like the laws of physics - you can't take out more than went in.
Of course, there are always new people putting new money in, which is why Barjon discusses money flow. If you think that is an argument against zero sum, well let me introduce you to my mate Bernie.
Does it matter is sort of a separate topic that I would also call "can I benefit from it?"
So - for Zero Sum, here is how I see it:
Imagine a bunch of people standing around a bucket. They all have a cup of water each. Each of them will throw their cup of water into the bucket. Once that is done, they all wait for a whistle to blow. When it does, they will all attempt to take out more water than they put in. What is the likelihood that each of the players will succeed and take more water out than they put in? Exactly, it’s impossible.
Now, the markets may well be abstract, you cannot understand them completely any more than you can understand every trader in his PJs with his finger over the mouse. With that in mind, it's a bit like the laws of physics - you can't take out more than went in.
Of course, there are always new people putting new money in, which is why Barjon discusses money flow. If you think that is an argument against zero sum, well let me introduce you to my mate Bernie.
Last edited:
DionysusToast
Legendary member
- Messages
- 5,965
- Likes
- 1,501
Let’s go back to our bucket. The bucket is full of water, a bunch of people are all waiting with their empty cups to try to scoop out more water than they put in. I am now going to announce that these people are all men. I am not being sexist, just that women are far too sensible to play games like this. Let’s say 75% of the guys are 170cm tall and weigh 160lbs dripping wet and 25% of the guys are 190cm tall and weigh 220lbs a piece. What are the chances that amount of water collected will be even between the smaller and larger guys? The chances are the little guys won’t even get close to the bucket.
Not only that, the little guys have egg-cups, the big guys have pint glasses and the bucket is leaking into the exchanges hands to pay all the costs of the "Financial Services Industry".
Now, before you go slit you wrists, having an egg cup isn't necessarily a bad thing.
That is, as long as you acknowledge one thing:
The markets are competitive. A lot of people chasing after the same money.
I get slated a lot for knocking TEXTBOOK TA on here. One of my major objections is that people think you can read a book, learn that when A and B line up it's time to trade and then print money off it forever. If Trading is really competitive, then an objective book-read approach won't work because in all competitive environments I know, it is your own skill that makes you a winner and not something you got from a book.
So - from me, that is all I have to say on the "Zero Sum" part of the markets but it will come as no shock that I have a bit more to say on the "So how can I benefit from this?" portion.
Not only that, the little guys have egg-cups, the big guys have pint glasses and the bucket is leaking into the exchanges hands to pay all the costs of the "Financial Services Industry".
Now, before you go slit you wrists, having an egg cup isn't necessarily a bad thing.
That is, as long as you acknowledge one thing:
The markets are competitive. A lot of people chasing after the same money.
I get slated a lot for knocking TEXTBOOK TA on here. One of my major objections is that people think you can read a book, learn that when A and B line up it's time to trade and then print money off it forever. If Trading is really competitive, then an objective book-read approach won't work because in all competitive environments I know, it is your own skill that makes you a winner and not something you got from a book.
So - from me, that is all I have to say on the "Zero Sum" part of the markets but it will come as no shock that I have a bit more to say on the "So how can I benefit from this?" portion.
Last edited:
DionysusToast
Legendary member
- Messages
- 5,965
- Likes
- 1,501
Ok - so let's presume that this is an opinion. That the zero-sum/competitive nature of the market is an opinion. What are the benefits for people with that opinion?
My take on it is that this opinion stops you from looking for "secret's". It puts you of the mindset that trading is a skill. Once you have that in your head, it is much easier to stick to something. Knowing that you will be crap at any new skill, you will put in the time to get better at it as opposed to looking for another secret.
Once you have the opinion that trading is competitive/a skill, you'll probably also bypass a hell of a lot of nonsense that simply makes no sense at all if that is true.
Most traders I've met (including a guy I was introduced to recently that was doing 10% of the volume of the SGX) are quite open about what they do. They don't claim that "they are really smart but can't show you how smart because they'd reveal their edge". They are simply very good at what they do and they know it.
My take on it is that this opinion stops you from looking for "secret's". It puts you of the mindset that trading is a skill. Once you have that in your head, it is much easier to stick to something. Knowing that you will be crap at any new skill, you will put in the time to get better at it as opposed to looking for another secret.
Once you have the opinion that trading is competitive/a skill, you'll probably also bypass a hell of a lot of nonsense that simply makes no sense at all if that is true.
Most traders I've met (including a guy I was introduced to recently that was doing 10% of the volume of the SGX) are quite open about what they do. They don't claim that "they are really smart but can't show you how smart because they'd reveal their edge". They are simply very good at what they do and they know it.
Similar threads
- postman
- Retail Trader