We can't all win.

[trendie]

There are some interesting threads arguing the toss about how many traders lose, and hair-splitting of how those numbers are represented, and so on.

But surely the essence of trading is that in order for someone to win, someone else has to lose.
Aside from market-makers and spreads, commissions, etc, money flows from a large pool of losing traders to a smaller pool of consistent winning traders.

Even if a winning system was freely available, and people followed it (like the good little turtles that they are), it would necessarily change the nature of the market being traded, once a critical trading volume was reached.

Whilst supporting and encouraging newbie traders, I have an ambiguity between enjoying trading, but not really wanting a killer system becoming freely available to them.

In the same way we accept losing trades as part of our personal trading, isn't accepting losing traders part of the reality of trading itself?

 

[Enzzo]

Whilst supporting and encouraging newbie traders, I have an ambiguity between enjoying trading, but not really wanting a killer system becoming freely available to them.

In the same way we accept losing trades as part of our personal trading, isn't accepting losing traders part of the reality of trading itself?

In my opinion, any "killing system" is at the mercy of the trader that picks it up...
so even revealing the best of all systems in the world (assuming it is any "best" or "worst" method in trading)... and having a lot of different traders with different levels of experience, interpretation of market, and of course trade managements, using the exact same initial rules base, there would be more consistent losers than winners traders.....
It is just how it is in my humble opinion...

 

[ega2freedom]

There are some interesting threads arguing the toss about how many traders lose, and hair-splitting of how those numbers are represented, and so on.

But surely the essence of trading is that in order for someone to win, someone else has to lose.
Aside from market-makers and spreads, commissions, etc, money flows from a large pool of losing traders to a smaller pool of consistent winning traders.

Even if a winning system was freely available, and people followed it (like the good little turtles that they are), it would necessarily change the nature of the market being traded, once a critical trading volume was reached.

Whilst supporting and encouraging newbie traders, I have an ambiguity between enjoying trading, but not really wanting a killer system becoming freely available to them.

In the same way we accept losing trades as part of our personal trading, isn't accepting losing traders part of the reality of trading itself?

The general rule of life.

Some win. Some lose.

In fact, in monetary terms there are more losers than winners.

 

[trendie]

In my opinion, any "killing system" is at the mercy of the trader that picks it up...
so even revealing the best of all systems in the world (assuming it is any "best" or "worst" method in trading)... and having a lot of different traders with different levels of experience, interpretation of market, and of course trade managements, using the exact same initial rules base, there would be more consistent losers than winners traders.....
It is just how it is in my humble opinion...

Well, yes.
That's my point.
Even if all traders got over their particular weaknesses, and all traders had the requisite patience, discipline, etc, it is the nature of trading that we can't all win, because the money comes from other participants.

I wonder if trading is a pseudo-ponzi, in that there has to be a load of people pumping money into the machine in the bottom eek, in order for the better traders to siphon it off at the top.

In order for a new lot of 5 winners, we need to encourage another 95 to be losers, via offers and advertising.
And webinars. :whistling

 

[bbmac]

Whether in the final analysis trading really is completely zero sum is still open to debate, but the theory certainly stacks up. Just as an aside I used to think that trading did not contribute to the real economy but when you think about it - leveraging your margin is effeectively the same as a loan from a bank and them creating money out of thin air (ie fractal reserve banking etc) and this money once created (and returned) is returned as 'real money to the 'real economy' that can buy goods and services ? Anyways, whatever the case the thread starter makes a good point (s) and it is probably a fair one. It is also true to say as the next poster does that the same edge in different hands with different emotions, needs, preferences, tolerrnaces, personalities will very probably produce differing results and some will most likely be losers.

On the point about not making an edge freely available and notwithstanding the above I think it has more to do with the value of that edge, and viewing it as an asset (the essential asset) of your trading business and therefore wanting to protect it's intellectual property as any business would.

I think the thread starter is right that this is the 'playing field' we choose to operate on and we are probably not going to change it - this is how it is made up so either accept it or leave it. You could extend the metaphor to life itself - ie we all pump money into the real ecnomy by buying goods and services and some at the top are blel to extract more out than most.

The real question remains the reasons why most traders lose over any period, and I am sure that most who experience this don't know/can't accept those reasons, or even unnderstand what winning actually is.

G/L

 

[tar]

But surely the essence of trading is that in order for someone to win, someone else has to lose.

Not necessarily , ie : i bought dow futures at 12900 then sold it to someone else at 13000 then he sold it to a market maker at 13050 , where is the loser ?

 

[wackypete2]

You guys aren't using FAP turbo??
You can all be winners!

Peter

 

[Enzzo]

In order for a new lot of 5 winners, we need to encourage another 95 to be losers, via offers and advertising.
And webinars. :whistling

 

[Enzzo]

You guys aren't using FAP turbo??
You can all be winners!

Peter

Lol...
Good one.....

 

[tar]

You guys aren't using FAP turbo??
You can all be winners!

Peter

 

[trendie]

Not necessarily , ie : i bought dow futures at 12900 then sold it to someone else at 13000 then he sold it to a market maker at 13050 , where is the loser ?

You bought from a market-maker at 12900.
You sold to someone else at 13000.
That other guy sold to a market-maker for 13050.

The price went from 12900 to 13050. a move of 150 pips.
You made 100, the other guy made 50.

The market-maker SOLD at 12900, and BOUGHT at 13050.
He is nursing a loss of 150, surely???

Obviously, to be pedantic, MMs make their money by balancing their order book.
That is, they make their money "differently".
In that respect, the MM didn't really "lose" 150 pips.

Without getting into the pedantics and minutiae of it all, do you really believe we can ALL win?

EDIT: actually, removing the MM from the equation, the MM acted as an intermediary for someone who wished to SELL at 12900, and acted as intermediary for someone who wished to BUY at 13050.

EDIT2: actually, let's not consider stocks either, as the complications of dividends could mean you sell a stock for a small loss, the shortfall is covered by dividends, etc.

 

[tar]

You bought from a market-maker at 12900.
You sold to someone else at 13000.
That other guy sold to a market-maker for 13050.

The price went from 12900 to 13050. a move of 150 pips.
You made 100, the other guy made 50.

The market-maker SOLD at 12900, and BOUGHT at 13050.
He is nursing a loss of 150, surely???

Obviously, to be pedantic, MMs make their money by balancing their order book.
That is, they make their money "differently".
In that respect, the MM didn't really "lose" 150 pips.

Without getting into the pedantics and minutiae of it all, do you really believe we can ALL win?

I didnt say i bought it from a market maker , it could be , and it could be from an investor who bought at 7000 or it could be a short seller who is still waiting to re buy on a selloff , or it could be a hedge fund manager who is long equities but wanted to hedge his risk on indices futures , the point is what you've said : in trading for every winner someone should lose is a myth . However in reality most retail traders do lose so you shouldnt worry :cheesy: .

Check the table at the end of this pdf , there is some good information there ...

http://www-bcf.usc.edu/~lharris/ACROBAT/Zerosum.pdf

 

[trendie]

Thanks for link. I have seen that report before, but will skim through it again over weekend.

 

[Enzzo]

On the point about not making an edge freely available and notwithstanding the above I think it has more to do with the value of that edge, and viewing it as an asset (the essential asset) of your trading business and therefore wanting to protect it's intellectual property as any business would

Very valid point right there...

And I know by a fact that traders that "make a killing" in a daily basis, trading for important firms, aren't very happy when someone else makes "public" any of their edges..... even when those edges, are practically the same ones, any trading starter can have access too even when it is hard to believe....

 

[DionysusToast]

the point is what you've said : in trading for every winner someone should lose is a myth

No - it's not a myth.

The fact is - the markets do not create money. So, the amount of money that can be taken out of the markets is limited to what goes in.

From what goes in, you have to take out fees which pay for IT infrastructure, marketing, salaries, bonuses etc. etc of the people that run the markets.

These costs make the markets a minus sum game. The remainder of the money that in the markets after these costs, is not enough to give everyone their money back. let alone make a profit.

It is a finite amount of money. If someone makes a profit, they took out more than they put in.

For every dollar gain someone makes, someone else has to lose. If you do not agree with this, then you have to explain where the money comes from to pay out more money than was put into the markets.

 

[barryb]

I didnt say i bought it from a market maker , it could be , and it could be from an investor who bought at 7000 or it could be a short seller who is still waiting to re buy on a selloff , or it could be a hedge fund manager who is long equities but wanted to hedge his risk on indices futures , the point is what you've said : in trading for every winner someone should lose is a myth . However in reality most retail traders do lose so you shouldnt worry :cheesy: .

Check the table at the end of this pdf , there is some good information there ...

http://www-bcf.usc.edu/~lharris/ACROBAT/Zerosum.pdf

It doesn't matter about the reason why they're doing a trade, whether it's a hedge or not. An individual is either richer or poorer, in the context of that single trade, after it has taken place. Forget about any other connecting trades, they either won or lost on that one.

 

[barryb]

Very valid point right there...

And I know by a fact that traders that "make a killing" in a daily basis, trading for important firms, aren't very happy when someone else makes "public" any of their edges..... even when those edges, are practically the same ones, any trading starter can have access too even when it is hard to believe....

You chat some sh1t

 

[trendie]

DT has put it more succinctly than I could.

Without getting side-tracked into the specifics of one trader buying and selling, etc, the "aggregate", "meta" structure is such that the only money you can extract is the money others have put in.
Less expenses and comms, etc.

 

[tar]

No - it's not a myth.

The fact is - the markets do not create money. So, the amount of money that can be taken out of the markets is limited to what goes in.

From what goes in, you have to take out fees which pay for IT infrastructure, marketing, salaries, bonuses etc. etc of the people that run the markets.

These costs make the markets a minus sum game. The remainder of the money that in the markets after these costs, is not enough to give everyone their money back. let alone make a profit.

It is a finite amount of money. If someone makes a profit, they took out more than they put in.

For every dollar gain someone makes, someone else has to lose. If you do not agree with this, then you have to explain where the money comes from to pay out more money than was put into the markets.

Not necessarily , as i've shown you on my example above , prices can go up and there is some investors who are willing to pay more , i made money but that doesn't mean someone else should lose , that is a myth , inflation effects stock prices and commodities as well , ie : customers spend more money to buy an ipad and an iphone , apple makes more money , stock price go up in value .

 

[tar]

It doesn't matter about the reason why they're doing a trade, whether it's a hedge or not. An individual is either richer or poorer, in the context of that single trade, after it has taken place. Forget about any other connecting trades, they either won or lost on that one.

i understand , you can ignore the hedging from the equation , my example still stands ...