The document discusses strategies for making money in the financial markets by understanding that they function as a zero-sum game where wealth is only transferred, not created. It emphasizes the unpredictability of price discovery and the importance of balancing present value with momentum value for successful trading. Key concepts include recognizing market imbalances and sentiment changes to capitalize on profitable opportunities while managing risk.

1. “The Zero Sum Game”: What you must understand in order to make money in the long run "I don't play the game by a certain set of rules; I look for changes in the rules of the game.“ — George Soros

2. How to win without relying on luck

3. Dispelling the myth of predictabilityLet’s take 3 cases:The Fundamental traderThe Technical momentum/trend trader (indicators)The Technical value trader (head/shoulders pattern) We can deal with randomness by putting it into context. Consider: Fundamentals

4. Sentiment

5. Order flowThe zero sum game: illustratedFX: Zero Sum GameStock Market: Net Wealth GameConsumerCentral BankInvestment BankPension FundProductResourcesCompanyCompany 2LaborInstitutional InvestorsCompany 1Investors

6. Rules of the gameRule #1: The process of price discovery is chaotic and thus unpredictable.Rule #2: The market’s job is to confuse the most participantsRule #3: No wealth is created or destroyed—only transferred. Rule #4: People don’t trade the market. They trade their opinions of the marketRule #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

7. Thinking in the presentValue vs. MomentumValue 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