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Admit it - your profits are based on luck

  • #421
  • Sep 30, 2008 7:02am Sep 30, 2008 7:02am
I dont think anyone is arguing that skill and hardwork cannot tip the odds in someones favour. I think we should remember that chance is involved in every endeavour. Look at the number of businesses that fail in their first year for example.

I would like to recommend the book Simplexity:The Simple Rules of a Complex World, by Jeffrey Kluger to anyone reading this thread.
  • #422
  • Sep 30, 2008 9:14am Sep 30, 2008 9:14am
Quoting Ted1983
I dont think anyone is arguing that skill and hardwork cannot tip the odds in someones favour. I think we should remember that chance is involved in every endeavour. Look at the number of businesses that fail in their first year for example.

I would like to recommend the book Simplexity:The Simple Rules of a Complex World, by Jeffrey Kluger to anyone reading this thread.

Yes, and look at the ones who fail despiting being around for decades and decades.

For example: Bear Stearns, founded in 1923, survived the crash of 1929 without laying off a single employee. Fast forward - Sept 2008 - Bear Stearns exists in name only. Both their 'fortune' and 'misfortune' is not attributable to luck, but to either a skillful or unskillful control of risk.

Simplexity - looks like a good one. im going to get it.
  • #423
  • Sep 30, 2008 9:29am Sep 30, 2008 9:29am
Quoting KudzuFX
Yes, and look at the ones who fail despiting being around for decades and decades.

For example: Bear Stearns, founded in 1923, survived the crash of 1929 without laying off a single employee. Fast forward - Sept 2008 - Bear Stearns exists in name only. Both their 'fortune' and 'misfortune' is not attributable to luck, but to either a skillful or unskillful control of risk.

Simplexity - looks like a good one. im going to get it.
With an element of chance thrown in the mix.

Yes its a good read. I'm about half way through.
  • #424
  • Edited 1:18pm Sep 30, 2008 11:43am | Edited 1:18pm
If the direction of the market goes up when I go long, that may be a bunch of chance and probability, luck or what ever one wants to label it. However, my profits and or losses are not based on luck, I directly control that with the click of my finger. How? Because I dont use leverage, which is a piont Tdion brings up. I can hold and or ditch a trade any time I desire, knowing that a margin call wont get me. Luck in profits would be to enter my program, close my eyes, and then hit the button.

Quoting tdion
Well, this discussion could go on endlessly. It comes right back to the original point of post #1....

After you click BUY or SELL, you can only watch the trade develop.... and you have no control over what it will do.

If you knew EXACTLY what makes the price move at the moment you enter your trade, it is no luck. But otherwise, every tick up and down is a random walk in freezing black space.
Well, this is exactly right. But your middle line lacks any inclination of luck. Those that watch the trade develop and make logical and consistent decisions as to when they enter and or exit a trade, that is direct influence of success or failure. For instance, I took an uleveraged trade on Silver at 17.50, as I didnt want to miss the boat. The market, by luck I suppose you would call it, just went down. I dont care, I got in twice as heavy at 11.00, it went up. If it goes to $4, I will put in a last position, which will be 3x as heavy as the first, maxing out my desired exposure on the commodity. If it goes up to 17.50, I will probably take profit on all of it. It is what I do with these trades, now that I hold them, by my own choice, that results in long term profit or long term failure.
The market is my nation. Traders, my family. Hello, brothers and sisters!
  • #425
  • Sep 30, 2008 1:07pm Sep 30, 2008 1:07pm
luck, when im too lucky i usually get 2 confident, so the luck usualy not good,...its control u, and the use of margin,...anyway its like playing chess with a kasparov and karpov together, not luck at all, and u cant cheat and they can...
its just money
  • #426
  • Sep 30, 2008 3:59pm Sep 30, 2008 3:59pm
Hi Tdion.
Very interesting thread I must say. In fact I am going to agree with you that trading is based on luck. But I would go farther. Isn't really life based on luck? I'm lucky to be born here(USA) But what am I going to do with that?

Just to use a real world example. I was driving my car(Los Angeles) the other day, when I see two cars in front of me starting to drift closer together. Now I could slow & watch what happens, I could speed up & try to go around them or I could do nothing. The outcome of any of these actions is unknown therefore it would be a gamble to take any one of them. I chose to slow down and as it was the cars the came together & crashed. I avoided the crash & damage to my car. Was I lucky or did I read the conditions of having driven in LA for years and take what I thought was the best action? If I understand you thoughts correctly, I was just lucky.
Personally I would say yeah luck played into it, but so did my experience & knowledge, which allowed me to take advantage of the luck.
So I guess the real question is how much does luck & how much does knowledge & experience goes into everything we do in life from getting in car and driving somewhere(where me arriving alive is not a sure thing) to weather I'm going to even wake up the next morning?
As far as my trading goes I will admit that sometimes I have been lucky, but other times (at least I would like to think) I saw something the market was doing & jumped on it for profits and it did just what I thought it would. Luck? Knowledge? I would say both.
  • #427
  • Sep 30, 2008 4:04pm Sep 30, 2008 4:04pm
Well I guess I'm gonna have to add my two pips.......... I don't think luck is the right word here..... when trading the markets we are looking for an edge and increased probability for a move to go in our chosen direction based on observation and ultimately price momentum..... which actually has a better chance than the coin flip.
Same Whore .... Different Dress
  • #428
  • Sep 30, 2008 4:08pm Sep 30, 2008 4:08pm
but, 1- minus your edge (which waxes and wanes anyway) is your chance of failure. The bad luck component you could say.
  • #429
  • Sep 30, 2008 4:28pm Sep 30, 2008 4:28pm
Quoting Ted1983
but, 1- minus your edge (which waxes and wanes anyway) is your chance of failure. The bad luck component you could say.
you must include money management with your edge.........
Same Whore .... Different Dress
  • #430
  • Sep 30, 2008 4:38pm Sep 30, 2008 4:38pm
Quoting johnedoe
you must include money management with your edge.........
I never said I had an edge.
  • #431
  • Sep 30, 2008 4:43pm Sep 30, 2008 4:43pm
I have a couple of questions.

If the outcome of trades is based on luck or chance then......

...how do you propose to become profitable, are you relying on a (long) run of good luck to see you through?

...why is it that most new traders have bad luck when they start trading, and then after maybe a couple of years their luck changes?
  • #432
  • Sep 30, 2008 4:58pm Sep 30, 2008 4:58pm
Quoting Ted1983
I never said I had an edge.
I guess you need to find one then.... an edge.......
Same Whore .... Different Dress
  • #433
  • Sep 30, 2008 5:03pm Sep 30, 2008 5:03pm
Quoting lostinspace
I have a couple of questions.

If the outcome of trades is based on luck or chance then......

...how do you propose to become profitable, are you relying on a (long) run of good luck to see you through?

...why is it that most new traders have bad luck when they start trading, and then after maybe a couple of years their luck changes?

Why cant you see that there is a COMPONENT!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
of luck involved in every trade.

Nobody is saying that its all luck.
  • #434
  • Sep 30, 2008 5:04pm Sep 30, 2008 5:04pm
Quoting johnedoe
I guess you need to find one then.... an edge.......
I'm on it John.
  • #435
  • Sep 30, 2008 5:05pm Sep 30, 2008 5:05pm
Great, it took me a little over 3 years to get there, now it's some simple refinements......
Same Whore .... Different Dress
  • #436
  • Sep 30, 2008 5:15pm Sep 30, 2008 5:15pm
Quoting johnedoe
Great, it took me a little over 3 years to get there, now it's some simple refinements......
Ok, so I checked the link in your sig. Nice results btw. To what extent does the magic eight ball figure in your trading regimen?
  • #437
  • Sep 30, 2008 5:26pm Sep 30, 2008 5:26pm
Quoting Ted1983
Why cant you see that there is a COMPONENT!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
of luck involved in every trade.

Nobody is saying that its all luck.
Well ok then "a COMPONENT!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!" is luck, so the answer to the questions would be.....?

...how do you propose to become profitable, are you relying on a (long) run of good luck to see you through?

...why is it that most new traders have bad luck when they start trading, and then after maybe a couple of years their luck changes?

I think you've painted yourself into a corner here
  • #438
  • Sep 30, 2008 5:35pm Sep 30, 2008 5:35pm
Wasn't it some golfer who said : "the more I practice the luckier I get"
  • #439
  • Sep 30, 2008 5:35pm Sep 30, 2008 5:35pm
Quoting Ted1983
Why cant you see that there is a COMPONENT!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
of luck involved in every trade.

Nobody is saying that its all luck.

there is a difference between luck and randomness.

yes there is randomness in every trade, but if you have prepared and have access to all necessary information you can make a trade and succeed without the credit going to luck. If the trade fails the credit for that failure does not go to bad luck or bad chance. The credit goes to lack of sufficient information, preparation and skill.

In the common language we use the term 'luck' to explain what we do not know or have not taken the time to figure out.
  • #440
  • Sep 30, 2008 5:56pm Sep 30, 2008 5:56pm
Quoting Ted1983
Ok, so I checked the link in your sig. Nice results btw. To what extent does the magic eight ball figure in your trading regimen?
When all else fails I consult the mighty oracle....
Same Whore .... Different Dress
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