![]() ![]() Their trading losses fund the winning traders who make prices efficient and provide liquidity.” Markets would not exist without utilitarian traders. Hedging and gambling provide other external benefits. The most important external benefits are expected returns from holding risky securities that represent deferred consumption. Traders are willing to lose when they obtain external benefits from trading. “Winning traders can only profit to the extent that other traders are willing to lose. He does this by categorizing traders by type and then evaluating speculative trading styles to determine whether the styles lead to profits or losses: Harris examines the factors that determine who wins and who loses in market transactions. Harris told me he was amazed at how many people came from my websites to download his white paper on zero-sum trading–the topic left out of most strategy discussions. ![]() In a zero-sum game, someone can win only if somebody else loses.” “Trading is a zero-sum game when gains and losses are measured relative to the market average. The zero-sum nature of many markets is arguably the most important concept in markets. He obliged and connected me even though my book at that moment was conceptual. Without skipping a beat I said sure to a review of his book, but asked for an introduction to his publisher, since I was writing a book, too. He wanted me to review his new book because I was driving more interest in his whitepaper, The Winners and Losers of the Zero-Sum Game ( PDF), than anyone else. Larry Harris, the finance chair at the University of Southern California, randomly e-mailed me. ![]() Six years into this website I decided it was time for a book or maybe the book decided it was time for me. Tulipmania: Human Behavior Stays the Same. ![]()
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