Where does the money difference come from?

S4 - Select - Underlying Markets futures
1

Hello

Kind of a novelty question I guess, but I’am just wondering where the money comes from when your trading futures.

Say you go long on TF and it goes up 2 points (20 ticks), and you take profit. Where does this 200 dollar profit come from, since to my understanding your just filling someone else’s order.

Might be a noobie question, but just was curios as to how it works

Thanks :grin:

2

You buy a chair for $10 at a garage sale and you sell it on craiglist for $20 you make $10

Its just money flow

If you buy at x price and sell at x price your net profit loss is the difference. Every order placed on an EXCHANGE is placed by 2 parties mutually agreeing to a price. So yes you are filling one persons order when you buy and you are filling most like another persons order when you sell.

The exchange credits your FCM account or debits it based on the PNL. If the exchange takes all the buys and all the sells at the end of the day and puts them together it will come to the amount of money received and paid out by use of mark to mark accounting.

Novelty question it wont help you make money. Focus on buy lower sell higher - withdrawal profits :slight_smile:

3

Ye I get that.

“You buy a chair for $10 at a garage sale and you sell it on craigslist for $20 you make $10” “If you buy at x price and sell at x price your net profit loss is the difference”

Using your example, the 10 dollars of profit is what I was wondering about.

Okay. If you go long it’s matching you with someone else going short and when and if it went against them (market going up)your profits come from their stop loss.

Got it.

4

The closing transaction will most probably come from someone else.

Just because you get filled on a Buy does not imply that when you decide to close your long position that the trader filling your sell order is the same one and incurred a loss.

Your Long matches a Sell, could be a SellShort as well as a Sell, someone exiting/closing their long position.

All the traders could be profitable.

5

This is not what I said and is Inaccurate.

This does not mean it was a stop loss. They could just as easily be entering or taking profit as you don’t know their entry. They could be doing a combo position and hedging anther position.

@ Strive "Ye I get that. “You buy a chair for $10 at a garage sale and you sell it on craigslist for $20 you make $10” “If you buy at x price and sell at x price your net profit loss is the difference” Using your example, the 10 dollars of profit is what I was wondering about.

Okay. If you go long it’s matching you with someone else going short and when and if it went against them (market going up)your profits come from their stop loss. Got it."

6

EXACTLY! Dont make it complex or overthink it. Focus on your profits thats hard enough as it is :slight_smile:

7

Hey Darrel,

Wasn’t trying to put words in your mouth hah. :confused: Was just putting what I got out of it.

Thanks for all you and the Apex team does. :smile:

1 Like