Is Forex a Zero−Sum Game?

kead · December 2, 2009, 1:59am

So is it? there are mixed answers on the net, can anyone clear it up?

n_aftab · December 2, 2009, 4:36am

once you take into account slippage and spread, you can consider it a negative sum game,

Money transfers take place from loosing accounts into winning accounts. Thats why its flouted around as a zero sum game.

N

Valkryder · December 2, 2009, 5:22am

I think the short answer would be ‘yes’. However, does that take into account any one of a million factors that may cause a currency to devalue relative to another? What is the net affect of monitization of debt like the US is doing now by printing money? Will take someone with a lot more expertise than I have to answer that.

kockneerebel · December 2, 2009, 5:45am

Just as long as it is a positive sum game for me I don’t really care

TalonD · December 2, 2009, 6:38am

All I know is I’m a consumer with a demand for money and I need suppliers to meet that demand

kockneerebel · December 2, 2009, 6:41am

LOL so glad there are many suppliers

rhodytrader · December 2, 2009, 8:27am

If you just contain things to trading then yes, forex is zero sum because for each long you have a short. That’s where zero sum comes from (negative some after transaction costs). When you add the straight out exchange of one currency for another for the purposes of doing trade transactions (and tourism spending, of course) then you lose the strict zero sum aspect.