Is Forex Trading a Zero-Sum Game?

There is a misconception among some traders that every trade must have a winner and a loser. There is a great deal of misinformation out there and even some books published recently that incorrectly state that Forex trading is a zero-sum game. To clear up the confusion created by these inaccuracies, let's first understand the meaning of that phrase.
Suppose you place a friendly bet with an acquaintance on the outcome of a football match. Each of you puts up an equal amount of money (let's say $100), and at the end of the game, one of you will walk away with $200 and the other will be $100 poorer. That is a zero-sum game in its purist sense; unless the game ends in a tie, there will be one winner and one loser – end of story.
Now let's apply this concept to the currency market: Suppose you enter a long position on EUR / USD, and at the same time, another trader takes a short position in the same currency pair. The broker simply matches the orders and collects the spread. This is exactly what the broker wants – to keep the entire spread and maintain a flat position.
Does this mean that, in the above-described scenario, one party has to win, and one must lose? Not at all! In fact, both traders can win or lose. Perhaps one has entered a short-term trade and the other a long-term.
Perhaps the first trader will take a profit quickly – but there is no rule that states the second trader must close his or her trade at the same time. Later in the day, the price reverses, and the second trader takes his or her profit as well. In this scenario, the broker made money (on the spread), and both traders did, too. This example destroys the oft-repeated fallacy that every Forex trade is a zero-sum game.
By the way, stock trading is not a zero-sum game either. Suppose you buy 100 shares of XYZ at $40 and sell it at $50. Another trader buys it from you at $50 and sells it at $60. Yet another trader buys it at $60 and sells it at $70. Which trader lost money? The answer is that none of them did; they all made $10 per share.
What about traders who are short XYZ? There is no rule that states that anyone has to short XYZ stock, and it is highly unlikely that there are as many shorts as there are longs, or more precisely, that there are as many shares sold short as there are purchased long.
So, what type of trade can be accurately called a zero-sum game? Options come to mind: Suppose you purchase some XYZ call options. Where did they come from?
In order for you to purchase those calls, someone else has to sell or "write" them. If the price of XYZ stock reaches the strike price and beyond, the buyer wins, and if it fails to do so, the seller wins.
While this represents a true zero-sum game, it is clear that this situation is the exception, not the rule. Trading can be a zero-sum game, but that isn't always the case. I just wish people would think about these things a bit more deeply before they emphatically state that trading is a zero-sum game.

*Reprinted (and modified) with permission from Online Trading Academy (www.onlinetradingacademy.com)