Thread: Is trading really a zero sum game?

I used to argue that unlike futures and options, the stock market is not a zero sum game. I would cite how an IPO could rise in price on the first day of trading and how the many shareholders made money the moment one share traded at a higher price. Or perhaps after a good earnings announcement, shares rocketed.

What changed my mind was when several people pointed out that stocks do not create money. The value of those shares was greater but that was notional wealth. If you paid $10k for the shares and they're now worth $15k, it's just a paper value. It's no different than my telling you that the $50 watch on your hand is worth $2k. It's just a notional number. You don't achieve that $15k (shares) or that $2k until someone gives you that money in return. And then, his loss (the money) is your gain. It's just the transfer of money.

Suppose the amount of money in the stock market was fixed. Shares would trade hands (along with the cash) and some would gain while others lost. The only difference from that hypothetical is that new money comes into the market and it simply repeats the process of exchanging shares for cash. It's the perfect pyramid scheme.




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This question is very complicated. In one sense, this is true. But Maximum time it is wrong for most of the traders. If you don't have enouigh knowledge about forex and you go to trade without any knowledge, forex will be zero sum game for you. But On the other hand, those who have enough knowledge abou this market can easily make money from this market by using their experiences. I am also a trader. I am currently trading with Forex4you. At first, I couldn't maek money fromthis market. After researching and gathered knowledge , I can make profit now consistently.

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