Trading is important to me.
So is NOT feeling like for me to “win” someone else has to “lose”. Worse yet, under the zero sum game theory, for me to “win” someone else DID “lose” in the trade.
Makes sense, doesn’t it? You close a trade at a loss .. someone else was the counter party (took the other side of your trade) and WON. Right?
Then someone else took it a step further and proposed Forex trading is actually not a Zero Sum Game but a NEGATIVE SUM GAME!
Meaning if you consider the BROKER who makes the spread on every trade (or gets a commission) — then EVERY TRADE not only has a LOSER but the Broker Spread actually creates a permanent and unbeatable LOSS on every trade.
Now … how can anyone with any conscience buy THAT as a fair and equal wealth opportunity
and feel good about it?
I couldn’t. I tried. It messed with my Trader Mind and my Trader Soul every time I thought about it. Even when I wasn’t thinking about it …. I was thinking about it at some level, because I had problems seeing and taking the winning trades like I should.
Like “Autopilot Loser Syndrome” or something!
IS IT TRUE?
Is Forex at best a Zero Sum Game and at worst a Negative Sum Game with worse than a loser in every trade … the whole THING sucks money away from the “innocent”Huh
You know … there’s a fairly long explanation if you drill down all the “rabbit holes” there are to the complete solution to this. Does it really take that to feel better and KNOW that’s not the case at all?
Don’t we just have to find ONE … maybe two or three real answers that prove those wrong?
Is it important to even know really if those two myths are real?
Yes, I think it is. The reason? Because sooner or later, even if NOW wasn’t the time you became aware that every time you WIN … someone else LOST, it would sooner or later come to you.
And then it DOES mess with your ability to trade.
So, here’s just a couple of examples of how …. THEY ARE MYTHS. Not fact.
YOU …. just closed a trade at a HUGE profit. Let’s analyze just a few of the several possible scenarios PLUS we will (for the pure of thought and heart) show where THE BUCK STOPS and any differences “wash out” into a system that it doesn’tmake any difference at all in, who won or lost on a trade with even 500 or more pips of profit.
YOU …. just closed a trade at a HUGE profit (remember?) …. so WHO LOST if you GAINED?
Scenario # 1 — YOU closed the trade at profit. And the COUNTER PARTY to your liquidity is JUST NOW OPENING a trade. Did they lose? How could they? They aren’t CLOSING a trade, this is the OPEN for them. *** No Guilt Trade ***
Scenario # 2 — YOU just closed the trade at profit. And the counter party is ALSO closing
a trade and in order to close THEIR TRADE, it has to be the OTHER SIDE of your trade.
Example you’re closing a EUR/USD trade. Couldn’t THEIR TRADE carry the USD part from ANOTHER CROSS?
Does that mean THEY LOST? Who knows? It’s not related. *** No Guilt Trade ***
Scenario # 3 — YOU OPENED A TRADE. Did you lose? No, you are just now opening the trade. Did the COUNTER PARTY lose? Only if they bought / sold their original trade creating your liquidity at the exact same price you did. *** No Guilt Trade ***
OTHER CONSIDERATIONS … the spread the Broker gets.
Does that create an EVERY TRADE IS A LOSER FOR SOMEONE AND SIPHONS OFF MORE MONEY situation?
No. First, we’ve seen there doesn’t have to be (by force of mechanics of a trade) a loser in every trade you close at profit. It also doesn’t mean there ARE NO LOSERS.
Hey. We’ve had losing trades, right?
We’ve just shown “A” (any trade) does NOT always equal “B” (a loser every time).
The spread. Or commission. Or both. Are they just “bleed out holes” in the Forex Body?
No! When you perform work at your job or service, are YOU a “bleed out hole” in the body of the organization you work for? Of course not.
YOU ARE A SERVICE POINT OF VALUE. And … you get PAID for creating a value.
The spread is compensation for a value provided in every trade. No compensation … no trading.
To put forward a theory (think Myth) that this compensation is just one more way to LOSE is simply false. There is a value provided which just happens to be “non-negotiable” that we have to have it, or there’s no trading. That’s not even something that can be questioned.
SO PUT YOUR MIND TO REST (especially if this just unsettled it!).
Forex trading is not a ripoff program or some form of guaranteed losing system for “someone”.
Meaning … you don’t need to believe YOU will be a FORCED VICTIM of some UNBEATABLE machine that will take your money because, “That’s the way it is! It’s Zero Sum Man…..” isn’t the case in truth at all.
You see now … you can win and THEY can win too.
So who takes the “beating” when that traded currency finally makes it’s way out to the “Real Money World” and it’s now valued LESS than when it went in?
Yes, differences in value of money make a difference in “buying power”. Right? But the system of real money value, real money transactions dictate a rule.
THE #1 MONEY RULE
When we buy something, whatever we BOUGHT must always have a HIGHER USE VALUE to us than the CASH VALUE we paid for it.
OR … what?
We don’t buy it.
Meaning … we won’t part with our hard earned (or Traded … which is still EARNING IT as far as I’m concerned) money for anything we measure as worth LESS to us in Use Value, than we feel our MONEY VALUE is worth.
“Translation” … the CONSUMING PART OF OUR ECONOMY makes the entire thing a self monitoring, self correcting field to bring the money back into circulation and use.
In the end, Forex is a stand-alone force of economics separated from us through the filter
of the PURCHASING PUBLIC and the forces and dynamics of value against cost.
It is so deep and complex and “self correcting” that we don’t need to worry even about that.
Trade with a clear mind (and conscience) …