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by chillydawg
3662 days ago
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Every single trade you place has several costs associated with it. Things like the direct cost to the broker, and the implied cost of half the current spread. I do not believe that most people have the skill or discipline to understand the difference between happening to make money and properly making money long term. As for it not being gambling - there's nothing stopping you beating bookmakers. It's doable, but you need to spend an awful lot of time researching sports (or whatever). It's the same with stocks - the vast majority of people are essentially just taking the spread and making expected losses on every trade, which the bookies (market makers in stock terms) soak up. A few people can spot outliers and take only those bets and make money long term. I stand by my claim. If it's so easy to make money on the stocks why isn't everyone doing it? |
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Sure, and I agree on that point.
> If it's so easy to make money on the stocks why isn't everyone doing it?
No one said it was easy. Merely that it's not gambling; gambling implies that's it's random and you can't find any edge, but people clearly do find edges and make money consistently so it's not gambling, it's just damn hard. However, it's a fallacy to conclude that you have to be better than the pros to make money for exactly the reason I specified, the pros are playing a harder game because the more money you have, the harder it is to find alpha.
It's vastly easier to get a 10% return on a few tens of thousands that it is on millions or billions because of liquidity and slippage. You can't exit a losing position in the billions instantly like you can when you have a few thousand, or enter quickly, it's an entirely different game.