I just got into the stocks market. AFAIK every transaction must have someone selling and someone buying, both thinking that they will be making money. How can both be making money?
Does that mean at least half of everyone in the stocks market will have to be losers?
In: 97
You can sort of mathematically divide stock purchases into two components: investment and day-trades. Most stocks go up in price over the long term, and/or pay dividends, so if you buy a stock and hold it for a long time on average you’ll make a profit. In the short term, stocks tend to fluctuate up and down a lot.
If you’re day trading and trying to buy high and sell low relative to the average price, then people who manage to pull this off and sell at a high point will gain, while people who buy at a high point will lose, at least compared to what they could have if they sold at average.
If you’re buying and holding, almost everyone is a winner unless you get unlucky.
If you add the two together then you get more winners than losers, but definitely some of each.
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