This topic seems to polarize traders at times so lets hear it!
- Joined Feb 2006 | Status: Blah blah blah | 1,410 Posts
The breaking of a wave cannot explain the whole sea.
Is Forex a ZERO Sum game? 62 replies
zero-sum game question 6 replies
Zero Sum Game - Debt 50 replies
Discussion on "Zero-sum Game" Article 7 replies
Forex: A Zero Sum Game? 18 replies
DislikedThanks for the thread.
My answer to your question: trading is a zero-sum game. Whereas investing is a non-zero-sum game.
Interest rates are an example of a non-zero-sum game at play in the markets. With it, "I create money."
Account balances are an example of a zero-sum game at play in the markets. With it, "I...Ignored
DislikedThus trading is limited to a zero-sum game that's defined by the non-zero-sum game of investing b/c the ability to create money is causal to the ability to give or take it in the first place.Ignored
Dislikedi don't understand how ppl can end up with the conclusion that the markets aren't zero sum.Ignored
Dislikedhaving a different motive than making money does not make it less of a zero sum game.
The whole system can be concised to it's purest form as money in, money out. Regardless of intentions, if the above premise holds true, it's zero sum.Ignored
QuoteDislikedIn game theory and economic theory, zero-sum describes a situation in which a participant's gain or loss is exactly balanced by the losses or gains of the other participant(s)
DislikedSomeone buys one of my two flats with 200.000 . I don't care why, it's his will to do that. I use the money in order to open a business and make profit. Who lost here? Was the guy who obtained what he wanted or was it me who also reached my goal?
Remember that market is not NYSE, betting companies and so on. It's not a fixed place. The market exits where there are two men and one object to trade.Ignored
QuoteDislikedNon-zero-sum
[edit] Economics
Many economic situations are not zero-sum, since valuable goods and services can be created, destroyed, or badly allocated, and any of these will create a net gain or loss.
DislikedNo, that quote contradicts you. How can someone have a loss if I make profit? I make profit because they are willing to buy, let's say, candies from me. I win, they win. We both have what we wanted. Zero sum is where you gain, while the other losses.Ignored
QuoteDislikedIn game theory and economic theory, zero-sum describes a situation in which a participant's gain or loss is exactly balanced by the losses or gains of the other participant(s).
QuoteDislikedIf the total gains of the participants are added up, and the total losses are subtracted, they will sum to zero.
QuoteDislikedSituations where participants can all gain or suffer together are referred to as non-zero-sum
QuoteDislikedThus, a country with an excess of bananas trading with another country for their excess of apples, where both benefit from the transaction, is in a non-zero-sum situation.
DislikedLets make the things clearer.
Yes, the stock exchange can be considered a zero-sum game (if we get over transaction costs).
But if I exchange rice for beams, is this a zero-sum game? No. Money are goods (like rice). If one exchanges euros for paying his holiday and I sell dollars for his euros it's not a zero-sum game.
It's not the case. If I make profit from this transaction, what does his lose? Nothing.
This is the case. He "won" a trip to USA and I won 1000$. It's a net gain.Ignored
Grey areas:
Most transactions we discuss here are zero-sum, but a select few might not be. Those transactions, like the grey areas i mentioned above, don't really interest me.
Just my 2c...