Here is a question

[survivor]

Here is a question.

1. A Doctor earns money by curing you of your illness.
2. An engineer earns money by making a bridge for you..
3. A shop keeper at the pasar malam earns money by proving goods near your house.
4. An army man earns money by defending the country.
5. A mechanic earns money by fixing your car.
6. Bandaraya earns money by cleaning up.
7. Astro earns money by providing you a service - entertainment in your house.
8. Siti Norhaliza earns money by providing you with a musical feast.
9. The policeman earns money by providing you with safety.
10. The government earns money by providing a stable society.
11. A lawyer earns money by representing you in the court of law.

etc etc.

so,

A trader earns because ............?

He must be providing a service otherwise he will not earn money.

What benefit or service does he provide ?

s.

[swingtrader100]

I can think of a few of what traders provide:

1. liquidity to the market.
2. commission to the brokerage industries.
3. business to the trading support and advisory services.

[ycc]

Doctors, enginnering etc provides their service in return for a reward.

Trader provides their time and risking their money, and get their Reward (which could be negative reward).

So it is almost equal.

Also whenever you participate, you are making the economy to move.
If everyone stays in cave plant own food, the economy going to go down pretty fast, for a start stock market and other business going to "lau sai" (in hokkien). As there are very little "kang tau" left.
by this theory, the highest traffic accident in malaysia actually adds on GDP to the nation. Because, it involves services: ambulance, insurance agent, ... 






 

[csong]

For me one thing for sure is trading reduce my expenses in buying red wine, which supposely if consume in moderate amount lower the risk of heart attack. 

Just by looking at the minute charts ticking up & down made my heart pumps faster thereby preventing any chance of blood clots and plaques formation in arteries 

[survivor]

Swingtrader100,

"1. liquidity to the market."

Can agree on this one but:

Only if the trader puts in LIMIT bids and offers.

How about that ?

s

[survivor]

Question no. 2:

Putting in Limit bids or offers is definitely not going to earn one anything. In fact, if in all likelihood we assume that one is an uninformed trader one will lose. Why?

1. If one puts in a limit bid and buys from an informed trader then the price will go down
 -> Loss.

2. If one puts in a limit bid and the informed trader is on one's side but comes in at the market the price may run away ... Or if he comes in at the limit together then one has only a partial fill -> Opportunity Loss.

So what is the solution to this problem ?

[survivor]

Ok. so takers on that one.

The simple answer is not to trade with the informed traders. Stupid answer but correct.

So here is the next question 3.:

How does one know that it is an informed trader (or in other words somenody who knows more than you) on the others side ?

Huh ?

[Maxforce]

There is always a more informed trader on the other side.
One mountain high, another one higher

[survivor]

On a more serious note, one way could be to assume that more informed traders trade with larger postions.

So when you see some heavy at-the-market bids or asks - say 10 or more contracts-then the heavy hitters are in the market.

But this whole issue is confused at the end of the month with the roll overs which could last upto 4 days - which is almost 20% of the of the time.

I think a better way would be simply to concentrate on the price move itself. ie. the magnitude and the speed.

Which leads to the question no. 4:

Should one simply follow the heavy hitters at the market, ride on their coat tails or as I have found, wait for about 10-15 minutes and still bid or offer at the limit ?