Difference Between Poker and the Stock Market

[pig4bill]

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They are both negative sum games. Poker has the rake and stock trading has commissions and spreads. Both are very difficult to overcome for the vast majority of people.

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Commissions are really insignificant IMO. If I buy $100,000 of stock with a $10 commission that's nothing. The rake in poker is much more difficult to overcome. Second of all even if one is doing day trading in a very limited number of stocks, they have the upward bias of the market working for them. I realize that people are not compensated for taking individual company risk and the systematic risk varys from stock to stock (GE correlates more with market movements than somehting like KKD for instance) but there is an upward bias nonetheless. Not true in poker. Sorry the market makers in stocks and the house in casino poker are not the same thing at all, not even close.

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This isn't true. Commissions are only a small part of your "rake"

Day trading generates huges costs, and not just in the form of commissions. There are also spreads to overcome, which are even more significant when day trading as the spread takes up a greater proprtion of your trading channel.

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Huge costs? Spreads? Commission and spreads often total 2 or 3 cents per share. That is what you call "huge costs"?

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And then there is the slippage...... [img]/images/graemlins/frown.gif[/img]

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Slippage??! Have you been reading a futures systems article? Slippage is irrelevant with stocks.

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I've yet to see a short-term trading system that generates a greater net profit than the costs it produces.

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You haven't looked very hard. I think you have a misconception of what stock daytrading is.