The derivatives market is a pure zero-sum game before costs. Every dollar gained on one side of a contract is a dollar lost on the other side. After costs, it becomes negative-sum. The aggregate pool of trading profits, across all participants, is negative by the amount of total transaction costs. Money flows out of the trading ecosystem to intermediaries, exchanges, and infrastructure providers.

A clarification: this zero-sum framing applies to trading—speculating on price movements over short horizons. Long-term equity investing, where you hold companies that grow earnings and pay dividends, creates real value. But this is a book about trading, not investing. Every dollar you extract comes directly from another participant.

The math is simple: most traders must fail. Not as a moral statement. Not because they lack discipline or intelligence. As arithmetic.

If the total pool of trading profits is negative, then the average participant must lose. Some will win, capturing more than their share. But for every winner, there must be losers whose losses exceed the winners’ gains by the amount extracted in costs.