how zero sum games apply to finance
in the stock market trading is often thought of as a zero sum game however because trades are made on the basis of future expectations and traders have different preferences for risk a trade can be mutually beneficial investing longer term is a positive sum situation because capital flows facilitation production and jobs that then provide production and jobs that then provide savings and income that then provides investment to continue the cycle options and futures trading is the closest practical example to a zero sum game scenario because the contracts are agreements between two parties and if one person loses then the other party gains while this is a very simplified explanation of options and futures generally if the price of that commodity or underlying asset rises usually against market expectations within a set time frame an investor can close the futures contract at a profit thus if an investor makes money from that bet there will be a corresponding loss and the net result is a transfer of wealth from one investor to another 