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The Zero Sum Game
The Zero Sum Game
The Zero Sum Game
The Zero Sum Game
The Zero Sum Game
The Zero Sum Game
The Zero Sum Game
The Zero Sum Game
The Zero Sum Game
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The Zero Sum Game

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An animated description of how the currency market works compared to the stock market, and how to use the principle of the "Zero Sum Game" to make money trading forex.

An animated description of how the currency market works compared to the stock market, and how to use the principle of the "Zero Sum Game" to make money trading forex.

Published in: Business, Economy & Finance
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  • Only wanted this to be a 5 min video but it turned out to be much longer
  • Talk about returns here. Successful Tas might already be doing this without knowing it
  • Graph of GBP vs. IR differential. 2. Breakout from range. 3. H/S. All information is already factored in. So this is wehre we start thinking outside the box 4. Fourier addition
  • Currencies may increase in rate due to country becoming more valuable, but not too much, because it could hurt the country.
  • The truth: there’s so much randomness and so many different opinions and motives that you can’t predict. However, you do know when the market has become increasingly one sided. THIS WILL EVENTUALLY MAKE SENSE
  • This happens on every time frame
  • This happens on every time frame
  • This happens on every time frame
  • Transcript

    • 1. “The Zero Sum Game”: What you must understand in order to make money in the long run <br />&amp;quot;I don&amp;apos;t play the game by a certain set of rules; I look for changes in the rules of the game.“ — George Soros<br />
    • 2. How to win without relying on luck<br />
    • 3. Dispelling the myth of predictability<br />Let’s take 3 cases:<br />The Fundamental trader<br />The Technical momentum/trend trader (indicators)<br />The Technical value trader (head/shoulders pattern) <br />We can deal with randomness by putting it into context. Consider: <br /><ul><li>Fundamentals
    • 4. Sentiment
    • 5. Order flow</li></li></ul><li>The zero sum game: illustrated<br />FX: Zero Sum Game<br />Stock Market: Net Wealth Game<br />Consumer<br />Central Bank<br />Investment Bank<br />Pension Fund<br />Product<br />Resources<br />Company<br />Company 2<br />Labor<br />Institutional Investors<br />Company 1<br />Investors<br />
    • 6. Rules of the game<br />Rule #1: The process of price discovery is chaotic and thus unpredictable.<br />Rule #2: The market’s job is to confuse the most participants<br />Rule #3: No wealth is created or destroyed—only transferred. <br />Rule #4: People don’t trade the market. They trade their opinions of the market<br />Rule #5: The profitable players in the market are a minority (by definition). The way they win is by knowing the hand (position) of the majority<br />
    • 7. Thinking in the present<br />Value vs. Momentum<br /><ul><li>Value buyers look into the future, and momentum buyers look at what just happened in the past: Unfortunately both are using the past to predict the future
    • 8. Hint: Think in between the two, and that is the present.
    • 9. Let someone else catch falling knives
    • 10. The “secret” formula:</li></ul>IMBALANCE + SENTIMENT CHANGE = PROFIT<br />
    • 11. Thinking in the present<br />IMBALANCE + SENTIMENT CHANGE = PROFIT<br />An imbalance happens when the market as a whole starts to reach a consensus<br />A sentiment change can be realized when price starts responding to events and technical levels differently (also when media focuses on something else)<br />A profit is realized by letting someone else discover where the bottom is, catching the meat of the move, and limiting risk while also accounting for randomness<br />
    • 12. Example<br />
    • 13. Please send your questions to me!kris@thegestaltshift.com<br />www.thegestaltshift.com<br />Thinking outside the box to profit from forex<br />

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