It don’t care where the **** it comes from, from wherever it does, it ends up in my account, and that’s all I care about.
If Trader A is long and Trader B is the short on the other side, then so long as both have their positions on then the gain of one must be the loss of the other. It’s just like having a “hedge” on. Yes, Trader A could close his long at a profit and walk away, and Trader B could stay short and see the market come back to put him in the black as well. That would certainly mean both end up with gains, but Trader B’s recovery to neutral and then profits have to come from someone else (Trade C, for example) being long on the other side of his short.
LOL…
I can’t believe this…
This rationale assumes that there are only 2 trades on any single period of trading…
Or even worse… it assumes that you are trading against someone else durectly, which you are not, you are trading vs the market, and the money you make comes from it.
Maybe in your head, but those with common sense would understand I was making an example which applies to any amount of traders in the market. Opposing positions of varying amounts, lot sizes etc could all be opened and it is entirely possible for the vast majority of them to close at a profit.
The assumption that there has to be a loser for every winner in a market is the flawed logic here, the money a trader makes as profit comes from the fact that the assumed value of the commodity has changed, when someone is prepared to pay more for something than it was worth yesterday, you make profit, not because the man who buys it today has lost money, but because he is willing to pay more for it than you did.
That applies to straight out asset markets (like stocks) where you actually own something and there need not be a short on the other side. In a contract market like spot forex and futures where there must be a short for every long it is the losses of the losers that provide the profits of the winners.
it comes in that is all that matters
But surely spot forex is not a closed market it is a part of the overall foreign exchange currency market which includes all kinds of transactions much of which are not held positions with the intention of profit making, they are just currency exchanges neccessary for buisness transactions, government debts, foriegn investment etc ? Or am I wrong about that ? Is forex a closed market encompassing only those engaged in trading currency for profit ? If that is the case I was wrong and I would agree someone really would have to lose money for a trader to make money in forex.
Oh come on, this is getting worse than ‘Is forex Gambling?’, as long as your balance is getting bigger, who cares?
The people whose accounts are getting smaller… they care…
Spot forex is the market for agreements to do exchanges, but there are no actual exchanges done, so there’s no direct linkage with the cash currency market. There’s no ownership involved in the positions and you can’t deliver currency that you own seperately against your spot position because you never get to delivery due to the roll. This would be different in the inter-bank market where deliveries actually take place, but not in retail. Even the brokers doing their hedging in the broader market aren’t in delivery positions. As a result, retail spot forex is a contained market.
Thank god for newbies without any MM or strategy!
If that’s their case, they’re in the wrong game.
Not everybody needs delivery of cash. SDC is right if it goes farther than just the technical theory of trades. Some ppl and even big companies and banks are hedging currencies without wanting to get the cash. Like many send checks around and don’t need cash to buy some stuff. Even I hedge sometimes currencies while I take a trip overseas. I mentioned that already. Why can’t you understand that? If I know I must travel in 6 months from Europe to the US I can buy usd and sell eur now (aka going short in eurusd) to fix the exchange rate of now. Same if I want to buy something overseas in a couple of weeks or months. I can fix the rate for now. Then if the time comes, I can just reverse my transaction and do the deal or I could even get some cash then. This is called hedging.
International companies are also doing exchange transactions via forex. It’s exactly, because they don’t want to exchange cash overseas. If department A in the US wants to make a deal overseas with department or branch B in Europe, dep. A can buy and dep. B can sell whatever they want via forex. This way the transaction costs are negligible in comparison transactions from bank account to bank account.