Re: Difference Between Poker and the Stock Market
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Assuming markets are priced efficiently, you are always giving up edge when investing in the market to market makers. That is, the more you trade, the less you are expected to win. I like to think of commissions as rake and the edge lost to market makers as negative Sklansky dollars. In poker you still pay the rake, but profitable players instead are the recipients of Sklansky dollars.
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Nothing stops you from being a market maker yourself.
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Correct, all you have to do is have a large amount of capital, and purchase a seat on an exchange and you too can make two sided markets.
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Most exchanges are order-driven, which means as long as you're able to quote a price, you're effectively a market maker. Some are technically not, but it doesn't make a big practical difference, as long as you have good execution. Bid-ask spreads exist because in a locked market, market makers lose money on average, not because market makers need to make money.
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