We have all heard of the law of conservation of energy. Energy neither disappears out of thin air nor is created out of thin air. It simply transforms from one form to another.

So the money used to participate in market transactions is the same.

For example, the current price of a coin is 1 yuan, and you buy one with 1 yuan. Soon after, the price rises to 1.5 yuan, and you sell it, and another person buys the coin you sold. Transactions cannot be carried out without buyers and sellers. If you can sell, it means someone is willing to buy, and if you can buy, it means someone is selling.

Then the price of the coin continues to fluctuate, and the person who bought the coin from you continues to hold it. Suppose the price of the coin suddenly drops to 0.75, this person can't bear to cut his losses and sells it at 0.75.

There were 3 transactions in total.

The first time, you bought at price 1.

The second time, you sold it at 1.5.

The third time, the person who bought your coin sold it at 0.75.

There are two traders who complete one buy and one sell, which means they have completed one complete transaction.

You, buying low and selling high, made a profit of 0.5.

People who bought your coins bought high and sold low, and lost 0.75.

In this case, isn't 0.5-0.75 -0.25? How can it be conserved? Because the transaction has not ended, only these two transactions have ended, and the currency will continue to be traded in the market.

The person who bought it at 0.75 sold it to you after it rose to 1 yuan. It seems that a cycle has been completed.

You made a profit of 0.5, one lost 0.75, and one made a profit of 0.25, so the total is 0, right?

There are only two trading outcomes in the market: either buy low and sell high (make money), or buy high and sell low (lose money).

So the money earned is taken from traders who buy high and sell low.