Welcome to NexusFi: the best trading community on the planet, with over 150,000 members Sign Up Now for Free
Genuine reviews from real traders, not fake reviews from stealth vendors
Quality education from leading professional traders
We are a friendly, helpful, and positive community
We do not tolerate rude behavior, trolling, or vendors advertising in posts
We are here to help, just let us know what you need
You'll need to register in order to view the content of the threads and start contributing to our community. It's free for basic access, or support us by becoming an Elite Member -- see if you qualify for a discount below.
-- Big Mike, Site Administrator
(If you already have an account, login at the top of the page)
Is stock/equity a zero sum game? how can the price of stock moves?
Once IPO occurs the shares go the the public.
One does not have to lose for another to gain.
You are a SHAREHOLDER.
Stocks Gain...you sell. It continues to go up...the second buyer gain as well.
The 3rd guy buys at the pick of the market because his barber gave him a tip, and then he loses his pants.
But he still holds on, because cutting his losses short was not on his laundry list.
Then these guys, we call them JP and M (they did the initial IPO), come out with a report that the stock the 3rd guy is holding is worthless, and it's going to zero. JP and M in the mean time scoop every single stock which they recommend to sell..and this is how the cookie crumbles on the stock side.
You know what is the moral of the story? Don't talk to your barber about stocks.
Trading futures and options involves substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results. You may lose more than your initial investment. All posts are opinions and do not claim to be facts. Please conduct your own due diligence. Use only Risk capital when trading Futures.
1 800 771 6748 local 561 367 8686 email [email protected]
How do the 2nd 3rd buyer buys if the stock skyrocket and everyone who bought at primary market (before IPO) dont want to sell it to them? (everyone wants to hold on to a profitable stock isn't it)
I'm trying to understand why stock is not a zero-sum game as futures/options/forex (or is it? Bank prints money)
OK two things to say about this.
First off a all markets are a function of demand, time and money, you might wonder why the house you buy for $400,000 one day is worth $490,000 in five years and why did you get to buy it and why someone would sell that house, but your seller might be an estate of a dead person, a divorced couple who bought that same house for $65,000 before you were born. To them a great profit, for you an opportunity. So yes it is a zero sum game but it is a market with many reasons to buy and sell. So why did the house price go up, well the "market" more people right now are buying than selling. Think what you would pay for water during a major storm, BUT if everyone sold their house on the same day, clearly the price would not be rising. Often your equity or forex buy today is form a HFT computer that just soaked you for $.02 a share but a month later you made $5 a share. A market has many participants, and many goals and many time frames!
Second, Markets trend. Want proof? Go to a 5 year chart and enter the one letter symbol, V. That is Visa, and every hedge fund on earth has been buying it like crazy, every day, every month, month in month out. The market is like a game of musical chairs, as long as you are careful to get a seat when the music stops, why cant you predict this will go higher? Bulls spot trends and get away before the game ends. Pigs keep their snout in slop till they get slaughtered. That's how a zero sum game works and yes you still can make you money if you are a bull or a bear, but not a pig.
If you and I traded some stock directly between the two us, then yes it would be. To use your example, if I sold you 1000 FB shares at 30 and the stock is now 32 and you sold it, then you made $2000 and I broke even because $30 is the price where I bought it.
Unfortunately, we both used brokers. You paid a broker $20 to buy FB and $20 to sell it, so your profit was really $1960. I also paid the same commissions, so I am not even, I lost $40.
So it's not a zero sum game. The brokers have drained some money from the game.
