Trading Dollars

DEFINITION of 'Trading Dollars'

A slang term describing a company that is spending just as much money as it is making on a product that it develops. Trading dollars refers to a breakeven business investment. The company essential trades its expenses for an equal amount of return, thus the name "trading dollars," or "trading dollars for dollars."

BREAKING DOWN 'Trading Dollars'

Since businesses are interested in generating profits, trading dollars is a situation that typically describes a waste of effort and resources. While the venture did not lose money, the capital could have been allocated to a profitable venture. In this sense, any event that results in trading dollars can be viewed as a loss rather than just a break-even event.

For example, a gold exploration company that spends $10 million to mine $10 million worth of gold can be said to be trading dollars. Likewise, an oil company that invests $5 million to extract only $5 million worth of oil is trading dollars. These business ventures are zero-sum games, where the business's gains are exactly balanced by its losses (or expenses) in product development or in a particular business investment.

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