Forex is a Zero-Sum Game I recently stumbled across an article that argued that forex trading is not a zero-sum game. The author is (unwittingly) correct in his conclusion, although not in his reasoning that it is possible for a trade to produce two winners 04/05/ · Forex is a Zero-Sum Game: Each position you hold, long or short, there will be someone else on the other end who will be losing money if it goes in the direction you want. (think about the mechanics of exchaning the money and variable rates) -Forex is often lumped in with futures, etc. as a risky market I think you mean “Forex is a zero sum game”. What this means is for every gain in your account, there is an equal loss in someone else’s account. Money is not “made” per-say, it is simply transferred. The “sum” of the entire market never changes, all the gains subtract all the losses = zero
Forex: A Zero Sum Game? - The FX View
A Zero sum game is any game or activity where a participants forex zero sum game or loss is exactly balanced with the losses and gains of the other participants. If the total gains are added together and the total losses subtracted the sum will be zero, hence the name zero sum game, forex zero sum game. Poker is one example of a zero sum game where players can only gain at the expense of other players.
I have seen a forex zero sum game of debates regarding whether Forex is a zero sum game. Technically Forex is in fact at best a zero sum game as any gains made by one trader are equal to the losses of other traders.
Thus Spot Forex can accurately be described as a zero sum game. It has been argued that Forex is not a zero sum game as not all participants in the spot market are making speculative transactions. For instance a tourist may swap his Pounds into Dollars and intend to spend all of his Dollars while he is on holiday in Florida. Such a market participant will not care if the market moves against him while is on holiday. This does not change the fact that overall the Spot Forex market is at best a zero sum game as total gains will always be equal to total losses.
For retail traders spot forex is in fact a negative sum game. A negative sum game is any game or activity where the sum of total gains and losses is negative i, forex zero sum game. e below zero. The reason why spot Forex can be considered a negative sum game is that traders incur substantial costs when trading the currency markets. Brokerages charge a marked up spread or commissions to traders, these mark-ups and commissions are used by the brokerages to cover their costs and to earn a profit.
This means that the sum of forex zero sum game and losses is in forex zero sum game negative making Forex a negative sum game. Does it matter that Forex is zero or negative sum game? This is where the debate really heats up. Some have alleged that retail traders face the problem of gamblers ruin. In a fair game one with no information advantages between two players which continues until one player is made bankrupt, less well capitalized player has a much higher possibility of going bankrupt.
It is argued that since the retail trader is speculating against the rest of the market which has vastly more capital the average retail trader is very likely to go bankrupt. It simply means that any profits you make come at the expense of other market participants. Any profits made from Spot FX come from either other trader s losses or are rather almost like an extra transaction cost for companies.
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Is FX Trading A Zero Sum Game?
, time: 4:52The Forex Zero-Sum Game - The Lazy Trader
16/08/ · Technically Forex is in fact at best a zero sum game as any gains made by one trader are equal to the losses of other traders. As currencies are traded in pairs, if one trader buys one lot in the EUR/USD and another trader sells one lot of the pairing any gains by one trader will be equal to the losses of the other trader. Thus Spot Forex can accurately be described as a zero sum game. It has I think you mean “Forex is a zero sum game”. What this means is for every gain in your account, there is an equal loss in someone else’s account. Money is not “made” per-say, it is simply transferred. The “sum” of the entire market never changes, all the gains subtract all the losses = zero Forex is a Zero-Sum Game I recently stumbled across an article that argued that forex trading is not a zero-sum game. The author is (unwittingly) correct in his conclusion, although not in his reasoning that it is possible for a trade to produce two winners
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