Zero Sum

Zero Sum

Describing a situation in which the gain of one person equates to the loss of another person. That is, for every dollar one person makes in a zero sum transaction, another person loses a dollar. Not every transaction is zero sum: stock trading is not zero sum because some trades are mutually beneficial to the buyer and the seller. Options and commodity markets, however, are zero sum, as wealth cannot be created from these transactions, only shifted. See also: Wealth creation.

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Zero sum. A zero-sum market is one in which one investor's profit mirrors another investor's loss. For every dollar one person makes, someone else loses a dollar. Commodities and options markets are examples of zero-sum markets. Stock markets are not.