There is a paradox in financial markets that many traders eventually encounter:

the most profitable strategies often stop working precisely because they become popular.

This is not a coincidence. It is one of the fundamental laws of the market.

Many of you may have watched Margin Call, a film that explores the events surrounding the 2008 financial crisis. It is one of the most insightful movies about market dynamics and systemic risk. The story follows a trader who consistently generates stable profits over many years. By executing his strategy with discipline, he steadily grows capital and eventually attracts billions of dollars in investment into his fund.

From the outside, other funds and traders observe this success with a mixture of admiration and envy. They carefully track his positions, analyze the assets he buys, and attempt to replicate his decisions. Over time, the crowd begins to move in the same direction. More institutions enter the same trades, liquidity becomes one-sided, and buying and selling turn increasingly concentrated.

At that point, the system begins to destabilize.

The outcome becomes inevitable: collapse.

The key lesson illustrated by the film is simple but powerful:

➡️ Once a profitable strategy starts leading the crowd, it begins to lose its effectiveness.

The reason lies in an unchangeable market rule:

Not everyone can win.

One participant’s profit is inevitably another participant’s loss.

A Simple Example

Imagine a market with 1,000 units of gold and 10 buyers.

That gold will not be distributed evenly.

If one buyer increases their holdings from 10 units to 110 units, the additional 100 units must come from somewhere. Someone else must lose them. This mechanism does not change, regardless of how complex the market becomes.

Gold, Paper Markets, and the Illusion of Liquidity

Speaking of gold, prices have reached historic highs in recent years. However, there is a critical fact that often goes unnoticed:

• The total amount of gold ever mined globally is approximately 217,000 tons
• Yet annual trading volume is close to 50 million tons

This means gold is traded at a volume roughly 250 times greater than its actual physical supply.

This situation resembles a casual poker game played without real money. Two players might bet large sums on paper, creating enormous “debts” that have no basis in reality. The numbers grow, but nothing tangible changes hands.

Much of what happens in today’s markets operates in the same way —

a paper-based game.

If all participants attempted to take delivery of the gold they supposedly own, prices would collapse instantly. There simply is not enough physical supply. The same structural issue exists in oil, platinum, palladium, copper, sugar, and many other commodities.

Strategy Capacity and the Capital Pool Problem

For a trading strategy to remain effective over the long term, it requires an exceptionally large capital pool. The pool must be so deep that the participants using the strategy cannot influence the market themselves.

If traders become large enough to move price through their own activity, the strategy loses its edge:

• The system’s internal balance breaks down
• Market behavior adapts
• The strategy stops working

Artificial Intelligence and Rapid Competitive Balance

In recent years, AI-driven trading systems have gained enormous attention. These are not the consumer-level tools available to the public, but advanced machine-learning models developed by major investment funds and financial institutions using massive budgets.

Yet even here, the same reality applies:

Competition equalizes very quickly.

The world is multipolar. If one group gains a technological advantage, others respond. As a result:

• Strategy lifespans become shorter
• Advantages are neutralized faster
• Counter-forces emerge almost immediately

The Future Belongs to Adaptability

Technology that defines investment today may become obsolete tomorrow. Over the past few years, global development has entered an exceptionally fast phase. Even entire industries are no longer guaranteed to remain relevant for a decade.

In this environment:

• Static thinking fails
• Legacy models collapse
• Flexible, adaptive approaches survive

To succeed in modern markets, one must resist following popularity, think independently, assess risk realistically, and adapt continuously to change.

Because in this game, winners are few.

Only those who adapt in time remain.