What is a Zero Sum Game in financial market? Basically it is a game that consist of equal sellers and buyers. Gordon Gekko in Wall Street movie once said “It's not a question of enough, pal. It's a zero sum game, somebody wins, somebody loses. Money itself isn't lost or made, it's simply transferred from one perception to another.” He is absolutely right! In Forex Market, one side is buying and one site is selling a pair of currency. The middle man (Forex Broker) will collect the tiny but huge in volume spreads is always the winner. They act like bookies in the football bet.
In Forex Market, more then 90% of the losers will transfer the money to 10% of the winners. The rules of thumb is simple: Greed and Fear make the whole market up and down, 90% players which don't know how to control the emotion and other aspects in the game will be knocked down by 10% of the professional players. One of the top 5 currency traders say 'There are rules in this game, if you don't know, better stay out of it!'.
You will ask ' Is the 10% winners win all the time?" The answer is 'NO!" Even the best traders in the world have the draw down period. But most of the time they are winner and some of them WIN BIG when the opportunities come.
For me, a typical hedging currency trader. Sometimes I win big (40-80% per month-The odds is on my side) and consistently 5-25% every month. On the drawn-down site, I experienced 15-25% , but only in a small scale of my overall portfolios (less then 5% of all). I will fix it back to the beginning level before attempting bigger leverage. My advice to FX trader, "Don't increase or maintain the leverage level on your account when you lose, you will be out of the game if you do!"
