According to George Carlin "Life is a zero sum game." Ask your undertaker if he agrees...
Is Trading A Zero Sum Game?
Well for starters, if you approach it as a game then the answer is quite probably yes. If on the other hand, you approach your trading business as you would any other business, the answer becomes an unequivocal no. Make that, Heck No!
In all business ventures we must confront the Profit and Loss sheet. Many businesses fail everyday both small and large. Good, hard working, tax paying people simply trying to bring a quality product or service to market at a fair price, sometimes fail. Despite the blood, sweat, tears, sleepless nights and fervent prayer, it just doesn't work out.
Is that business owner now damaged goods in the eyes of man or God because of his failed speculation? He worked hard, planned well, and whether it was a change in the weather or the social climate, success eluded him.
In the business of trading we are also confronted with a balance sheet. In trading there is also a cost of doing business. A sandwich maker must buy bread, a tailor must buy needle and thread, a trader must venture into the market and put money at risk on a daily basis. The job of the trader is to balance the risk so that there is more profit than loss. Some succeed and some do not.
This basic concept has not changed since Biblical times.
If you are a trader who risks your trading account on the inconsistent whims of random chance, you are likely the trader trying to cut corners and find short-cuts to trading success. In "compensation" the world over, everyone gets EXACTLY what they deserve. Life has a wonderful way of evening the score. Your pay-back is ultimately equal to your physical and mental efforts. If you're not willing to invest the time and money to develop the required skills, you will most likely transfer your account balance to someone who is. If there was a short-cut to trading success, I would have found it and gladly shared it for free. The truth is, success in trading comes at a great price. The willingness to roll up your sleeves, hunker down, work hard, and settle for very little initially while delusions of grandeur dance in your head.
Whether you are a trader, gambler, GM buying advertising on Facebook, retailer, casino, car dealer, franchise owner, flea market vendor, or someone who buys and sells things on eBay or Craigslist, you are at some level, a trader. The trader takes on risk in a market for a potential reward. The gambler risks a $5.00 chip on the roulette wheel to try and make $10.00. GoDaddy pays $1,000,000 (risk) for a 30 second spot during the Super Bowl in hopes of seeing a return (reward) on that investment. A return greater than the cost (risk) of the commercial. The retail store owner buys inventory (risk) in hopes of selling that inventory to you and I at a much higher price (reward). I think you get the point. If you think of it this way, the real question becomes: "What type of trader are you?"
Even if you are simply an employee of a company, you speculate each week that in exchange for your time and labor, your employer will properly compensate you as agreed upon. Sadly, hard working men and women around the world find out each and every day that they have made a bad trade and the company they labored for has become insolvent. They had no desire to be a trader, they simply wanted to work for a living and get paid. Professional traders do exactly that, they work for a living in hopes of turning a profit. They also understand the risk as well as the cost of doing business.
I have met many energetic believers who come into the trading world filled with admirable visions of how they will do good works with their profits. When those profits fail to materialize, the business of trading suddenly becomes evil, wrong, and a zero sum game. Trading is not for everyone. Most of us enjoy baseball but few of us will ever play for the Yankees. Simply promising the profits from my Coffee Shop to a greater good than myself, does not guarantee I will become the next Starbucks.
If you are considering becoming a trader, or perhaps you are a trader who is struggling, I encourage you to put down the mouse and pick up the keyboard. Draft both a business plan and a trading plan. Seek out a mentor and a broker you can trust. Read the Top Ten Trading Tips and ask yourself if you are really willing to commit the time and effort required to follow these steps.
If you need someone to talk to, with no obligation, no pressure and no judgement, call us @ 866-928-3310. Albert Einstein said
while expecting different results."
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