Discussion on "Zero-sum Game" Article

I read (well) this article
http://www.forexfactory.com/showpost...89&postcount=1
and there are some points, that I don’t understand well. Because of that, and because this article is placed in the rookie forum, my questions would be the same for the most beginners

Trading is a zero-sum game when measured relative to underlying fundamental values.

No trader can profit without another trader losing

Winning traders trade for expected profits. They generally profit from utilitarian and
futile traders. Some winning traders also profit from each other. If winning traders could not
profit from other traders, they would not trade

This is the first point I don’t clearly understand, and I think it should be explained well.
If this is correct, why traders share their knowledge? Every time a trader gains knowledge another winner trader lose profit (because the first one, doesn’t lose money so there is less dead money to gain for the winners). If this is true, the FX world should be like the betting world. I don’t know if you know that, but sport betting is beatable but winners don’t share what they know because, like above, everytime a bettor learn, there are less opportunities for the winners. But as we can see, many FX traders discuss here, so there are something to explain well


On any given transaction, the chances of winning or losing may be near even. In the long
run, however, winners profit from trading because they have some persistent advantages that
allow them to win slightly more often (or occasionally much bigger) than losers win


Near even is 5050, but I read on FF and my mentor told me if we are very picky with our trades we can get 70-80% winrate, is it correct or just fake statements?


Then we will consider trading, for which poker is a good metaphor.

I PMed some traders here at FF, and all of them told me that poker (this game is my only source of income) isn’t like trading.


Prices are made efficient primarily by winning traders. Not all winners contribute to price
efficiency, however.

What we mean as “efficiency of the price” ?


Utilitarian traders expect to lose from trading on average. They are willing to trade
because they obtain external benefits from trading. They trade when they value these benefits by
more than their expected trading losses.

What benefits we are talking about?

Traders share their knowledge for two reasons:

1. It gives a self-esteem boost and makes them feel like they helped someone. If I can protect someone from losing money which their family desperately needs in this economic climate, I will feel like I truly accomplished something.

2. We have been down the road everyone here is traveling down and we truly care about individuals we will never meet. We want to help you not be parted from your money.

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The percentage of wins is determined by both the trader and the system. A scalper wouldn't dare accept a system with 40% win rate and a trend follower would be lucky to be pushing 60% success rate.

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Let me give you a definition of investing and gambling. Investing is putting cash into something with a positive expectancy. This means we enter the markets expecting to make money from all of our work. If we enter a game with a negative expectancy, we would be gambling. Every time you walk into a casino, you are gambling. Mathematically, you expect to lose money. Trading can be either investing or gambling depending on the system the trader uses as well as his determination to master his system.

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Price efficiency means that the current price reflects the value of price and that fundamental, technical, and inside information will not allow the individual to profit in the long run. Market efficiency is a hotly debated issue in the field of finance.

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Traders who are here not to make money are typically after the emotional gratification of winning every now and then and the thrill of gambling. Determine your motives every day before trading. Are you here to win for your family or selfishly nourish your ego?

Ty for your post
And I'm here to learn, and switch from poker to trading... and because I'm taking poker seriously, I will take trading seriously, and the reason is only one $$$$$$$$

AQs, might I suggest you have a good read through a thread I was discussing in and see what sticks... I suggest reading from where I joined-in here :

http://www.forexfactory.com/showthre...98#post3213098

this is where I first chimed-in since I could not let some things get idly tossed-around without someone speaking-up.

I do not suggest I know everything or am necessarily right about anything. From my perspective I am right, at least still to now. Perhaps as I learn more and grow more my thoughts will change.

No one has yet convinced me zero-sum and forex belong in the same paragraph, page, article. They simply do not belong together, ever! (In my eyes).

Ty, I'm gonna read the whole thread in order to try to understand

1. The forex market is not just about us, the traders. The forex market encompasses the entire world economy and all the monetary transactions.
2. Take this example: a car company from Italy sells cars in the US. They sell the cars in USD$ but when the money comes back to Italy then need to exchange that money in EUR. That exchange transaction will be carried out by a bank, and one way or another that money will end up being somewhere in the Demand/Supply line on the foreign exchange market. That transaction will not be made as a speculation with an intend to make a profit! It will simply be a currency exchange, and the company will most likely lose money in that exchange!

It's not always as simple as we think it is.

The positive edge is achievable but you need to follow a very clear plan to get there.
You can do a simple backtest yourself to see if the edge is present and consistent for Pin bars and BEOBs/BUOBs for example. And you will see it is positive edge, actually a huge positive edge, and even better it is consistent.
How can you achieve it:
- patience
- a clear understanding of what you need to do when the Price action bar presents itself
- self-control: follow all the rules you have layed for trading that specific bar

The edge is there, you just have to learn HOW to profit YOURSELF from it.

None of which are poker players themselves, maybe that is why you got that answer. Seriously though, there are things in common and there are things that are very different.
Money management is somewhat similar. You have buy-ins we use 1-2% percentage of our account.
Patience (for the best setup or opportunity) is somewhat similar. But when you are trading you might get 1 setup per week or 1 per month, depending on what you are searching for.
Interpretation of your opponent / interpretation of the market movements. It's very similar but you won't get that answer from too many people, mostly because most lurkers around here have no idea of what and why the market is doing most of the time.

GL,
Sniper

Very nice reply snyper
ty

This has to be a large portion of it....