P
postman
Hello all this is my first thread.
I'm getting older and becoming more cantankerous, so things which I would have let slip previously seem to get on my nerves now, and, in the great tradition of a grumpy old man I'm putting the internet to right one 'fact' at a time.
I have heard a lot of talk about trading being a zero sum game. It is NOT!
If you are basing your trading strategy around you winning by someone else losing then don't.
Markets, shares and indices go UP. New money is pored into them month after month by new people (fish, bait, suckers) who have spent years saving a pot of money and now want to lose it quickly, and pension funds who must invest a certain percentage of their new money into equities.
There is a bigger pie every month for you (and your counter-party) to take a slice of, and your trading strategy should take this into account.
As an example of the NON zero sum game, if I buy a share from Peter at £10 and sell it to Paul at £20 I make £10 but NO ONE LOSES MONEY! Its just Mr Market making up a 'different' price.
The 'game' in question is a much larger one beyond mere share and index prices.
I hope that's cleared it up, so there wont be any need for questions will there?
How does this affect your trading strategy I hear you ask, well your trading coin toss is biased towards the 'buy' side, and so over time you should have more than 50% of your trades being calls.
Good trading all, and dont forget Everyone can be a winner.
Pass the Werther's original and my pipe dear.
I'm getting older and becoming more cantankerous, so things which I would have let slip previously seem to get on my nerves now, and, in the great tradition of a grumpy old man I'm putting the internet to right one 'fact' at a time.
I have heard a lot of talk about trading being a zero sum game. It is NOT!
If you are basing your trading strategy around you winning by someone else losing then don't.
Markets, shares and indices go UP. New money is pored into them month after month by new people (fish, bait, suckers) who have spent years saving a pot of money and now want to lose it quickly, and pension funds who must invest a certain percentage of their new money into equities.
There is a bigger pie every month for you (and your counter-party) to take a slice of, and your trading strategy should take this into account.
As an example of the NON zero sum game, if I buy a share from Peter at £10 and sell it to Paul at £20 I make £10 but NO ONE LOSES MONEY! Its just Mr Market making up a 'different' price.
The 'game' in question is a much larger one beyond mere share and index prices.
I hope that's cleared it up, so there wont be any need for questions will there?
How does this affect your trading strategy I hear you ask, well your trading coin toss is biased towards the 'buy' side, and so over time you should have more than 50% of your trades being calls.
Good trading all, and dont forget Everyone can be a winner.
Pass the Werther's original and my pipe dear.
