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Microcrap Revolution aka Maverick Money by Matt Morris free download (pdf & videos). What that means, is that for every trader that ‘wins’ an amount of money, there is a trader that ‘loses’ at least the same amount of money. Imagine the following: Jack buys a share of stock XYZ for $10.00 from John, and later sells it back to John for $15.00. This means that Jack ‘won’ $5.00, and John ‘lost’ $5.00. The sum of the gains and the losses equals zero. Easy and simple. If you think only about the situation as described above, then trading would be a zero sum game. However, there are a lot of factors that actually make trading a negative sum game for Jack and John. In todays time, a stock is bought via a broker. This broker charges commissions, which both John and Jack have to pay for their trade. The total sum of this game is therefore equal to -2 x commissions. Whenever you pay a broker commissions to buy a stock, another person is also paying a broker to sell that same stock. Let’s say these commissions are 1$/stock, then Jack would not have won $2.00, but only $1.00. John would have lost $3.00 instead of only $2.00. The total sum of gains and losses here is -$2.00, equal to twice the commissions.
