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    Thread: Is it true that my earnings mean the loss of others?

    1. #11
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      There is a need to understand this fact as a rule before we become Forex currency traders. We must know the ways we get paid in general so that it can help us. Yes, The profits that a Forex trader is able to make actually comes from other Forex traders around the World that are actually having losses and on the other hand also, Your losses is the same Money that others will be paid as their profits. This is why you have to be careful and trade Forex in such a way that you have enough knowledge, This knowledge is what guarantees consistent earners.

      Depending on the type of Forex Broker, We will receive profits which are other traders loss, Either the Forex Broker pays it directly, Or the Forex Broker will collect the Money from bigger banks that provide liquidity and pay to successful traders under their platform.


    2. #12
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      Actually if truly think about it deeply it's true, but. I don't think we need to worry ourselves with such thoughts, we have buyers In the forex market and so are Sellers.
      And for Example if we Buy and another trader sell and we Eventually loose the trade it doesn't mean the capital will go straight to another sellers no, I think it goes straight to the archive.

      I think we Should worry more about how we Can consistently be getting it Right on the market. And not worry about how our loss will be transfer to


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    4. #13
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      There is no relationship or connection between the losses of one person and the profits of another in the same forex business, each trader is driven by his strategy to pull the trigger, this is a highly probabilistic business, you cannot be sure about what a trade will bring in the beginning, so when unfortunately the market does not favour you, it does not mean you have just paid someone who guessed rightly.

      That would be a wrong analysis and way to see trading, rather see it as a market where there is enough to go round for all the participants, if we all because successful and made profit from the forex market, it will not automatically make the market become liquidated or go bankrupt and unable to pay our earnings. There is abundance in this business for everyone that is patient and knows how to analyze well.


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    6. #14
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      It is true . Forex is a zero-sum game!. This means that the gains of some participants equals the losses of others.

      Now it is important to understand this, so that you don't go feeling that you're reaping off someone else or something. What actually happens is this:
      In this business , we buy and sell currency pairs. This means that for us to be able to buy in the first place, there must be someone else willing to sell, also, for us to be able to sell, there must be someone else willing to buy that same pair. This is essentially the liquidity that is talked about. The market is said to be very liquid when there are as much people willing to buy as there are those willing to sell, hence there is free flow of transactions. Have you ever thought of it before that "OK, I want to buy 100,000 units of EUR/USD , at a certain price, but who will sell it to me? When apparently every trader is buying the pair as well" The answer to this is that, your broker will be the one to sell it to you because they are required to act as your liquidity provider and facilitate your transactions at all times.
      This leads me to another important fact; though there must be someone else taking the opposite side of your trade, it does not necessarily mean it is another retail trader, your broker can do it. There are different ways a broker can provide liquidity or facilitate trades, they can either:
      1. Match your trades with the trades of other brokers, which is the natural flow of the market. But this depends on how big the broker is and how large the number of traders they have, because a very small broker will likely not have enough participants on either sides of the market.
      2) Your broker can decide to take the other side of your trade. By doing so, they can either offset their positions by trading with a bigger broker, or a bank or just allow the trade go without offsetting it and bearing all the risks.

      Now going back to the previous example, if indeed you bought EUR/USD at price say 1.2000 and it moved higher to 1.2200, at $1 per pip you have made a profit of $200 and whosoever took the other side, (it may be one or more traders to give the same lot size) made the same loss of $200, remember, it may also be your broker itself.

      So it doesn't necessarily mean that another retail trader is losing when you win, and remember that it can only count as a loss when they close their positions. Who knows, your broker, can hold on to its positions with a floating loss until price returns.


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    8. #15
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      That is true like that way, some trader loss and some trader make a profit. That means the gains of some trader equals the losses of other traders. Some trader agree with this opinion but some of them is not, no body know the real and fact behind of it but if we think again the logica is so similar like that. Well, if we think like this it will be difference, if you make a profit but in other sides your friends is loss, it does not mean you have just paid your friend who has loss.


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    10. #16
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      Trading in the forex market would be manipulative and useless if your earnings is automatically someone losses, that is against the principle that guides this market because if those that have the authority to move the market in certain direction invest a large amount of money to push the prices, then those with smaller investment will lose and this will be consistent.

      When you lose money, accept the reality and responsibility and move on with your life, trying to interpret it with the mindset that someone has gained will make you engage in revenge trading and of course the final results won't be pleasant, there are people that don't understand forex trading and holds the wrong opinion about it.


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    12. #17
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      Earning of one trader might mean the loss of others is a very controversial issue or even very delicate. This needs to be considered as very sensitive and needs to be handled with utmost care.
      The parties mainly involved in trading forex are the brokers, the traders or clients which could be a body like a bank, an institute or the government and a central body that regulates the activities of the brokers
      For the brokers there are few known sources through which they make money;
      Spreads-This is known to be the difference between the ask price and the bid price. This happens on every order placed at any point in time. It is quite interesting to know that millions of orders are being placed on daily basis
      Affiliates-This is a programme where an account is opened and as the owner of the account gets commission on all the transaction of his invited clients. Thus brokers have such accounts to their advantage
      Commissions-Ib some cases some brokers charge commissions on overnight trade and the like. This gives them additional income in a way
      For the Clients which could be some individuals, governments or corporate bodies who is participating in trading makes money in a simple way i.e buy a currency at a low price and sell at a high price .It is just like the normal buy and sell situation of any business. In addition to this any trader can get involved in the affiliate program and in such a case he or she is more like a sub broker who is entitled to a part of the spread that comes from the placement of the trade of his own clients. Also he or she can get involved in Introducing Brokers (IB). He earns by introducing his or her brokers to people.
      Considering all that have been mentioned one would actually wonder where that interesting idea of when somebody gains there is one person somewhere who must have lost must have come from. It is indeed a very controversial issue that is worth looking at critically.This is a kind of riddle that need to be solved;
      A currency considered to be an entity when bought it must have been (sold by) from one person one way or the other (the low price, was it at a loss to the seller?). When the price goes up and it appears profitable, closing the trade which means the currency has been sold, to who ?. In trying to be conservative with this issue, one may have to assume that since one can get in and out of this trade at any point in time, then the brokers have all the currencies at her custody for sale and willing to buy any at any point in time.
      If this analogy is anything to go by,it then implies that when I gain the broker looses and vice versa. However this raises a sensitive question, “why then do brokers have educative programmes to help the traders to improve on trading in order to make profits?”.
      As far as I am concerned, the idea of “my earning means the loss of others “ is quite controversial.


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    14. #18
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      In forex trading although it might seem controversial but it's a zero sum game where a traders earnings means a loss of others. A Zero sum game is any game or activity where a participants gain or loss is commensurate with the losses and gains of the other participants. If all of the gains are added together and the total losses subtracted the sum will be zero, so the name zero sum game. One example of a zero sum game is Poker.There are lot's of debates regarding whether Forex is a zero sum game. Technically Forex is a zero sum game as any gains made by one trader are equal to the losses of other traders. We know that currencies are traded in pairs, if a particular trader buys one lot in the EUR/USD and another trader sells one lot of the pairing any gains by one trader will be equal to the losses of the other trader. Thus Spot Forex can definitely described as a zero sum game.

      There are lot's of argument that Forex is not a zero sum game as not all participants in the spot market are speculating. For example a tourist may swap his Pounds into Dollars and intend to spend all of his Dollars on a trip. Such a market participant will not care if the market moves against him while is on vacation. This does not change the fact that overall the Spot Forex market is at best a zero sum game as total gains will always be equal to total losses.

      Forex trading is a negative sum game for retail traders like us. A negative sum game is any game or activity where the sum of total gains and losses is negative that means it's below zero. The reason why spot Forex can be considered a negative sum game is that traders face good amount of costs when trading the currency markets. Traders are charged with various thing like spread, swap from the brokers, these mark-ups and commissions are used by the brokerages to cover their costs and to earn a profit. This means that the sum of gains and losses is in fact negative making Forex a negative sum game.

      Even though the debate will continue either our earnings means loss of others, I hope that this discussion has helped to illuminate us what's exactly it means for retail traders.
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    16. #19
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      It almost yes for me, if we try to think as logical if we making a profit that means there is a other trader faces loss outsides there. It is because forex are so similar with the system of gambling, usually many peoples say as zero sum system. There is two option to trade in the forex market, buying and selling the currency pairs.
      There are so many peoples that denied the opinion like this.
      They said how if all trader that exist of forex market at the same moment successful making correct position, then what money they get?


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    18. #20
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      No, it is not true that my earnings is the loss of others. It is false and totally wrong perception or idea about Forex business. Actually the real matter is this, the increase in the value of the economy of the country becomes the profit of the traders and the decrease in the value of the economy of the country becomes the loss of the traders. Now there is an opposite thing that often the decrease in the value of the economy become the profit of the traders and the increase in the value of the economy becomes the loss of the traders. It happens only when trader buy and sell trades in that situation when the market goes totally against the executed trades. What the matter would be. It is final that our profit is not the loss of other at any cost. The profit is our luck.


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