📌Do financial traders ,legally steal money from you?
Whether we like it or not, everyone involved in this game is more likely either 90% of the loser or a part of 10% of the winners!
Whatever we call it, this market has a very luxurious appearance, but inside it is very rough and ruthless with gangsters with masked ties or it looks like a forest or the sea, the stronger ones usually survive.
Our money is usually circulated through our accounts to eventually be transferred to the account of someone who knows the rules of the game well or maybe owns this playing field!
Is it true that banks ,exchanges or hedgefunds steal your money?
maybe, they can do. But in order to understand this, you need to understand the basis of current financial system and how it operates. How the money is being generated.
Money in world’s are merely numbers saved on the harddisk of the bank servers. The Account Balance that you see on your bank mobile app or bank website is not actual money, it’s just bits/bytes of a computer system.
Let me start with this example, suppose you deposit 1 million USD into your bank account. The balance of your account that your account statement/bank mobile App/bank website will show you 1 million USD.
But actually bank will not keep that money with itself, it will lend that money as loan to other people and will earn profit everyday day, every month & every year.
Now bank has already given your money to someelse as loan and bank doesn’t have those funds, but it will lie to you and will show you your account balance as 1 million USD where in actual those funds are alright consumed by someone else.
This concepts is known as fractional reserve which means bank like 80% to 90% or even more upto 98% can lend the deposited money.
So that means, if you have million or billion of $ in bank and if you go to bank and ask for all your money in one go, they won’t be able to return you your money, since they don’t have it with them.
Or in another example , the centralized exchanges where we usually trade digital currencies; So far, we have noticed how many traders in the futures market been liquidated and how much big money , the exchanges put in their pockets through this, they have access to the information of all traders at the same time and usually with the huge capital they have; With advanced possibilities and tools, overcome most traders .
How can most day traders lose money even when the overall market is going up?
Nassim Taleb in his excellent book “Fooled By Randomness” points out that every trade starts out with a 50–50 chance of being profitable, and that the longer the trade is held, the higher the probability that the trade will be profitable.
The fact is that most “traders” are a twitchy bunch that will bail on a trade after it has turned agains them, and fail to hold winning trades long enough to offset their losses.
The sad reality is that the game of trading is “cut your losers short, but let your winners run,” and “buy low; sell high,” but, most traders end up buying high and selling low. If I said “only buy on down days and only sell on up days” most people would nod their heads at the wisdom, but in reality, they tend to buy on up days and sell on down ones. And that’s why they lose money.
New traders quit because they lose all their money. Most of the time the reason is always the same, brand new trader reads a book or 2, learns a few chart patterns, and then goes into the live market unprepared for the brutality and volatility that there is in there and does so on an underfunded beginners capital account and whats happens that they blow out their account, happens all day everyday, it’s not that they want to quit they have to because they don’t have any more capital to trade with, don’t be that trader.
It is said that the failure rate among beginner traders is 97%. So ask yourself the question. Do I get into the 3% or the 97%, you’re the only one who can answer that question and you’re also the only one who can do anything about it because no one is making you do this business right?
The capital market is really an information market. It all comes down to who has the best information.And more importantly, how to make the best use of this information like an expert. Information is not free, In fact, almost nothing in this world is free.
It is better to change the word “steal” to “exploit.”
Here's why:
To steal something you need to have committed theft, which is illegal in the US. Most professional traders are performing their profession legally within the bounds of the law.
To exploit something you need to have found a novel way to make use of something others haven't. On Wall Street this is information. Professional traders are exploiting information in an attempt to get an edge over all the other market participants.
If you lose money in the markets it’s your own fault, not the fault of anyone who is better at it than you. nobody haven’t hurt you, when you made your mistakes, and the hedge funds just picked up the pieces.
Good luck with your trading and investing and remember: Trade smart…OR JUST DON’T TRADE!
These ideas were not only my opinions and also were the result of the opinions of a number of experts at quora.com
this article is For information purposes only!
Whatever we call it, this market has a very luxurious appearance, but inside it is very rough and ruthless with gangsters with masked ties or it looks like a forest or the sea, the stronger ones usually survive.
Our money is usually circulated through our accounts to eventually be transferred to the account of someone who knows the rules of the game well or maybe owns this playing field!
Is it true that banks ,exchanges or hedgefunds steal your money?
maybe, they can do. But in order to understand this, you need to understand the basis of current financial system and how it operates. How the money is being generated.
Money in world’s are merely numbers saved on the harddisk of the bank servers. The Account Balance that you see on your bank mobile app or bank website is not actual money, it’s just bits/bytes of a computer system.
Let me start with this example, suppose you deposit 1 million USD into your bank account. The balance of your account that your account statement/bank mobile App/bank website will show you 1 million USD.
But actually bank will not keep that money with itself, it will lend that money as loan to other people and will earn profit everyday day, every month & every year.
Now bank has already given your money to someelse as loan and bank doesn’t have those funds, but it will lie to you and will show you your account balance as 1 million USD where in actual those funds are alright consumed by someone else.
This concepts is known as fractional reserve which means bank like 80% to 90% or even more upto 98% can lend the deposited money.
So that means, if you have million or billion of $ in bank and if you go to bank and ask for all your money in one go, they won’t be able to return you your money, since they don’t have it with them.
Or in another example , the centralized exchanges where we usually trade digital currencies; So far, we have noticed how many traders in the futures market been liquidated and how much big money , the exchanges put in their pockets through this, they have access to the information of all traders at the same time and usually with the huge capital they have; With advanced possibilities and tools, overcome most traders .
How can most day traders lose money even when the overall market is going up?
Nassim Taleb in his excellent book “Fooled By Randomness” points out that every trade starts out with a 50–50 chance of being profitable, and that the longer the trade is held, the higher the probability that the trade will be profitable.
The fact is that most “traders” are a twitchy bunch that will bail on a trade after it has turned agains them, and fail to hold winning trades long enough to offset their losses.
The sad reality is that the game of trading is “cut your losers short, but let your winners run,” and “buy low; sell high,” but, most traders end up buying high and selling low. If I said “only buy on down days and only sell on up days” most people would nod their heads at the wisdom, but in reality, they tend to buy on up days and sell on down ones. And that’s why they lose money.
New traders quit because they lose all their money. Most of the time the reason is always the same, brand new trader reads a book or 2, learns a few chart patterns, and then goes into the live market unprepared for the brutality and volatility that there is in there and does so on an underfunded beginners capital account and whats happens that they blow out their account, happens all day everyday, it’s not that they want to quit they have to because they don’t have any more capital to trade with, don’t be that trader.
It is said that the failure rate among beginner traders is 97%. So ask yourself the question. Do I get into the 3% or the 97%, you’re the only one who can answer that question and you’re also the only one who can do anything about it because no one is making you do this business right?
The capital market is really an information market. It all comes down to who has the best information.And more importantly, how to make the best use of this information like an expert. Information is not free, In fact, almost nothing in this world is free.
It is better to change the word “steal” to “exploit.”
Here's why:
To steal something you need to have committed theft, which is illegal in the US. Most professional traders are performing their profession legally within the bounds of the law.
To exploit something you need to have found a novel way to make use of something others haven't. On Wall Street this is information. Professional traders are exploiting information in an attempt to get an edge over all the other market participants.
If you lose money in the markets it’s your own fault, not the fault of anyone who is better at it than you. nobody haven’t hurt you, when you made your mistakes, and the hedge funds just picked up the pieces.
Good luck with your trading and investing and remember: Trade smart…OR JUST DON’T TRADE!
These ideas were not only my opinions and also were the result of the opinions of a number of experts at quora.com
this article is For information purposes only!
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