Ask HN: Why be an option/futures/day trader when it is zero-sum?

Re:Ask HN: Why be an option/futures/day trader when it is ze... by xlnt on Thursday May 15, 2008 @06:17PM (#191080)

speculation done right consists of creating knowledge about what resources will be in what demand in the future, and then saving resources that are cheap now but will be expensive later. doing this raises the price a bit now (b/c you buy a bunch) and lowers it then (b/c supply is higher then). you make money smoothing out price fluctuations. this is a valuable service -- price fluctuations can really hurt people or companies that don't have spare money at the moment.

there is a limit on how much total money can be made doing this. the more people do it, the less price fluctuations are available to even out.

but anyway, there are good types of trading.

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Re:Ask HN: Why be an option/futures/day trader when it is ze... by brentr on Thursday May 15, 2008 @07:05PM (#191146)

I'm guilty of not creating a distinction between speculation and investing. Technically, investing done right consists of creating knowledge about what resources will be in what demand in the future. A speculator plays a mere hunch. The distinction lies in the amount of information processed in the decision formulation. A good discussion of the dichotomy between a speculator and an investor can be found in Graham and Dodd's Security Analysis.

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