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Gary,
I happen to think that your "highly unscientific theory"
is actual a highly rational and plausible one.
I think that it is especially true for stock equities,
where, the quantity of outstanding stock can rise or fall with the decisions of
the company board of directors. This upsets that rigid equalibrium that is the
basis of this "zero sum game" notion. With more or less "float," over time, not
all postions need be closed.
I'm still thinking this through on commodity markets. Here
there is a strict contract buyer-seller level of equality (where the exchange
takes the other side of a position if they canot find a public member to accept
the position). Here to, changes in the price of the underlying cause the total
capitalization of the market to rise or fall, just as you mention.
But, each contract has a finite life. Hmmmm. . . .
Coinage of the zero-sum game term comes from a
famous book title, and after your comment, I'm thinking that this takes a
narrow, almost instantaneous point of view, such as at the point of a single
trade.
Ken Hodina<A
href=""><FONT
face=Arial>kahodina@xxxxxxxxxxxxx
<BLOCKQUOTE
>
----- Original Message -----
<DIV
>From:
Gary
<gary.keeney@xxxxxxxxxxx>
To: <A
title=Metastockusers@xxxxxxxxxxxxxxx
href="">Metastockusers@xxxxxxxxxxxxxxx
Sent: Thursday, January 16, 2003 6:47
PM
Subject: [Metastockusers] Re: Full time
private trading... ... an unattainable dream?
How does the change in market capitalization in stocks
affect whether it is a zero-sum game? My highly unscientific theory
is that taking into account a large number of trades over time, the stock
market is not a zero-sum game because total market capitalization changes,
and traders participate in the change in capitalization. Everyone's
hope is that as prices go up, over a series of trades, both traders on
either side of a given trade can end up better off at some point in
the future.On the other hand, when market capitalization is
decreasing, prices going down, it's more likely that one or both traders
end up poorer. On yet another hand, does decreasing market
capitalization also represent money leaving the equity market and going to
another investment, and not necessarily a loss for traders.Futures
and options, on the other hand, seem to me to be zero-sum (or less than,
taking into account transaction costs).I should also read a book on
game theory, I'm sure I'm missing something. Shoot holes in my
theory, please, I'll learn something.Gary--- In
Metastockusers@xxxxxxxxxxxxxxx, "Lionel Issen" <lissen@xxxx>
wrote:> No Jason. Since you have to pay commissions (an entry
fee) it is not a> zero sum game. Just look up a book on game
theory.> Lionel> > > -----Original
Message-----> From: Bob Jagow [mailto:bjagow@xxxx] > Sent:
Thursday, January 16, 2003 4:12 PM> To:
Metastockusers@xxxxxxxxxxxxxxx> Subject: RE: [Metastockusers] Full time
private trading... ... an> unattainable dream?> >
> Jason,> Futures are zero sum [negative after
commissions]; stocks aren't if> you'll concede that buy-and-hold is
viable over the long haul.> > Bob> >
-----Original Message-----> From: Jayson
[mailto:jcasavant@xxxx]> Sent: Thursday, January 16, 2003 9:25
AM> To: Metastockusers@xxxxxxxxxxxxxxx> Subject: RE:
[Metastockusers] Full time private trading... ... an> unattainable
dream?> > > Lionel,> > Only in the
sense that you must pay commission on your trades. The> market is in
fact zero sum in that there must be a buyer for every> seller. That is
not to say that an individual can not make money, only> that for
every $ he makes there is a corresponding loser somewhere else.>
> > An individual has many advantages over the large
institutions and hedge> fund managers. He/she can turn on a dime.
Selling 1000 shares of CSCO> will not drive the market the way an
institutional sell of 1 million or> 10 million shares can.
This is exactly where the individual can make> money. By learning
to spot the signals that the big guys are trying to> load or unload
large volumes of shares in a systematic way the small guy> can take
his piece out of the middle of the move. If the small guy is>
trying to make money picking the big turns he will likely come out
short> in the end but by taking advantage of the overall direction
the big> money is currently steering the price he can very successfully
come out> on top.....> > Jayson >
-----Original Message-----> From: Lionel Issen
[mailto:lissen@xxxx]> Sent: Thursday, January 16, 2003 11:35 AM>
To: Metastockusers@xxxxxxxxxxxxxxx> Subject: RE: [Metastockusers] Full
time private trading... ... an> unattainable dream?> >
> The stock market is not a zero-sum game, it is a negative sum game
just> like the pari-mutuel race track. The money taken out is less
than the> money put in. This doesn't mean that everyone must
lose, but it does> mean that to win you must be
alert.> > Lionel> > >
> > > -----Original Message-----> From: Dan
[mailto:amarones@xxxx] > Sent: Thursday, January 16, 2003 9:35
AM> To: Metastockusers@xxxxxxxxxxxxxxx> Subject: Re:
[Metastockusers] Full time private trading... ... an> unattainable
dream?> > > Nick- > > I have been
trading off and on for about 10 years, both privately and as> a CTA
for a time. I am definatley on the short end of the net zero game>
as a whole, but my dream of being a full time trader has been>
revitalized and is on the way to being realized in the last year.> Who
knows, I may blow up the account and have to start over again at> some
point, but my experience in trading tells me I've finally
found> what works for me. I think that is the key - what works for
each trader.> I spent what feels like a lifetime with everything in
the trading world> that didn't work for me.> I disagree that
one must switch markets to be consistently successful.> If any
market has the characteristics of orderly accumulation and>
distribution and sufficient liquidity, then it can be consistently>
traded.The markets on the U.S. futures and equity exchanges offer
too> many issues and markets that exhibit these characteristics for
me to> consider trading more than just the cream of the crop. I don't
think it> is necessary to switch from domestic to foreign markets
and from> equities to futures to be successful - there are so many
market> personalities within each of those sectors, that the
opportunities are> far more than I have the capacity to
consider.> For me it would be ludicrous to ignore either the long or
short side of> the market because it would mean giving up half the
potential profits. I> use a 100% mechanical system developed with
Metastock that averages 76%> winners. It's not perfect, but it
backtested an average gain of 240%> annually over the last 2 years and
is perfoming as advertised in real> trading.> For me the
clouds have lifted and I can finally see the dream of being a> full
time successful trader on the way to being realized.> >
Dan Edens> > > > >
From: Nick Leong <mailto:zaiguy@xxxx> > > To:
Metastockusers@xxxxxxxxxxxxxxx > Sent: Wednesday, January 15, 2003 4:29
PM> Subject: [Metastockusers] Full time private trading... ...
an> unattainable dream?> > > Hi
group,> > I've been reading some articles about the hedge fund
management industry> and how most funds sustained losses over the
past 2 years especially> since Sept 11 and the US corporate scandal.
This is coupled with a> statistic I read that most novice traders leave
the trading arena after> about 3 months. These events really got me
thinking. . is it really> possible for one to be a full time private
trader?> > I've been trading privately for about 4 years not and
like most of you> I've had my ups and downs. I am a firm believer
that trading the market> is a zero sum game. Someone MUST lose in
order for me to make a gain.> However, the law of averages dictates
that it is just not possible for> anyone to be winning all the
time. That being the case, is it actually> possible for anyone to
be a full time private trader (i.e. trade using> only his own money
and make a living out of it)?> > The only possible way for one
to make money is possibly to be engaged in> the right market at the
right time, e.g. to switch between the> equities/futures/derivatives
markets or switch between the> US/Europe/Asian markets. But we must
also remember that a private trader> does not have the resources or
the mental capacity to handle so much> information or research at a
single time. What option would be left> then? To specialise and trade
only in specific markets and sit things> out when everything is not
going well? Do not forget that a downturn in> the market can last
for years.> > We can go into the nitty gritty and say that we
must set up stops to> prevent losses, but I'm sure most of you have
been in the situation> where you were stopped out too early or you had
given so much room> before being stopped out that you suffered a
painful loss. Don't get me> wrong, I believe that trading and
investing is an art and there is no> one mechanical way of getting
the right results. Ultimately, we are all> looking for one thing.
.PROFITS. However, I have come under the> increasing impression that
the odds are severely stacked against the> private trader.>
> I look forward to hearing from you guys on this matter.>
> Thanks.> > Nick Leong> > >
> > _____ > > Do you
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