|
PureBytes Links
Trading Reference Links
|
a big chunk of the futures mkt is the bond futures and that is not a zero sum
game.....
one of the ways people hedge their government, corporate and mortgage backed bonds
is with bond/int rate futures............if a corporate bond trader wants to
maintain a position of 100 million corp bonds(inventory) while reducing the
interest fluctuation(risk),
he/she will short an equivalent amount of bond futures............
this will give him a net -0-.......but the futures area/exchange will
not...........
ie....t-bond futures move 3 points up(limit), this shows a gain of $3 million for
the people on the other side of the short(assuminmg a short of 100
million$.......BUT the corporate trader is hedged and his position is net
-0-........
the point if this is that everyone in the futures is not just trading there.
Sentinel Trading wrote:
> I believe trading is a net sum loss game for the traders, consider trader A
> sells his long position to trader B to cover his short position, trader B pays
> 50.00 Trader A receives 45.00, thus the net was a loss between the traders. In
> other words 5.00 was taken out of the market by the brokers, dealers, and
> exchange.
>
> ____________________Reply Separator____________________
> Subject: GEN: Zero Sum Game
> Author: owner-realtraders@xxxxxxxxxxxxxx
> Date: 6/6/98 6:15 AM
>
> Let's talk about the concept of a Zero Sum game. The implication is that for
> every Dollar won, there is a Dollar lost. This is the nature of the futures
> market. Assuming you are a better trader than the "other guy", you will "win"
> that dollar and he or she will "lose" it. But that's a tough assumption to
> make, especially when one is just starting to trade futures.
>
> The stock market on the other hand is not a zero sum game. It averages 10%
> per year apprectiation, which I guess makes it a "10% Sum game" (long) and a
> "-10% Sum game" (short). Trading stocks on the long side is a fertile
> training ground for "future" "futures" traders who want to practice with a 10%
> backwind (try saying that 10 times fast). Just my opinion and food for
> thought.
>
> {DISCLAIMER: I have no professional connection with any stock exchange}
>
> Best Regards,
>
> Jerry Rehert (grehert@xxxxxxx)
> Atlanta, GA
> @ 06:03 am, June 6th, 1998
|