Definition: Zero-sum games involve situations in which one person's gains are the result of another person's losses. No wealth is created (or destroyed) in these games.
Examples: Examples of zero-sum games include options and futures. If a person makes money on an options or future contract, it means the person who sold it to him lost money.
Another example is gambling: either you or the house win.
What about the stock market? The stock market is not a zero-sum game because stocks are not simply investments traded from one party to another. Rather, they're representative of the underlying business. So if the business creates value, the stock will do so for the investor as well.
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Blending Market Structure, Fibonacci, and Volume Analysis
Joe Baker
Founder of Trade Pilot Pro, business entrepreneur for past twenty-two years in Real Estate & Financial Industry. Self-taught trader and Financial Software developer, member of Market Technicians Association, working on CMT designation
David Dube
Professional Trader for over twenty-five years having held Senior Trader positions at Lehman Brothers and UBS Investment Bank. David's knowledge and experience of Global Markets brings a unique trading perspective to Trade Pilot Pro's members. Currently living in Connecticut with his wife, he is an avid aviator holding Commercial and Instrument Ratings.
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Trading of securities, options and futures may not be suitable for everyone and involves the risk of losing part or all of your money. Commentaries are educational in nature and are designed to contribute to your general understanding of financial markets and technical analysis. Use it how you want and at your own risk. We are not registered investment advisors. This information is a general publication that reflects our own opinions and is not a specific recommendation to any one individual. You must consult your own broker or investment advisor for investment advice. Past performance is not a guarantee of future success. Controlling risk through the use of protective stops is essential.