The financial markets are definitely not zero sum games, in that one trader's gain is not offset by another trader's loss. Viewing financial markets as a zero-sum game implies zero economic growth, with gains and losses determined only by changes in price. A more accurate view is that the gains in the market are driven by the assets involved creating more value than they were in the past. The economic pie tends to increase and the gains outweigh the losses.
hey typo,
yea, agree with you. should have clarified my view: when i mean generally, i meant that in the
exact trade you are doing, one either loses, or gains (let's leave out the break-even scenario for now). So in that very superficial sense, it is zero sum.
but in the view of the entire portfolio: just because you lose one trade, doesn't mean the entire portfolio goes down the drain, if it's diversified. Plus, there's losing little, losing a fair sum, and losing a large sum. Same for winning. And so, it cannot be a simplistic binary situation of just win or lose. Years of winnings may be wiped out by one gigantic loss, or variables: Bear Sterns is the perfect example.
I think the economic pie increases, but so do the number of participants. It's like MLM. Only the ones at the top make the most, in the end. the aim of the game is to ensure you're not the lowest in the hierarchy of feeders.
edit: and one more thing: when you actually enter the markets, you can throw all your books out of the window. Preconceived notions are some of the best killers of new traders. Only one rule:
follow the trend. Even experienced traders die, when they cling to concepts and refuse to acknowledge the reality of the trend in front of them.