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Poll: Is successful trading more dependent on skill than luck?

  • #101
  • Jan 1, 2010 10:58am Jan 1, 2010 10:58am
The results of an individual trade is mostly to do with luck, a trading career is mostly to do with skill.

Think of it like a giant poker game. Any particular hand (or trade) is down to luck, but in the long run, if the game is played for long enough, nobody will have more good or bad luck than anyone else. Another way to think of it is like coin flipping game, the more flips, the closer the heads to tails ratio will get to 50/50.
  • #102
  • Jan 1, 2010 11:55am Jan 1, 2010 11:55am
Quoting equilibrium6
Why isn't there the option of 100% skill?

In the long term, all that matters is skill. Luck can only take a fool so far, and it may even be worse if the newbie is lucky in the beginning because he will think he's the big kahuna, will increase his betting size or size of account and eventually get busted big time.
Exactly, one of the three main ingredients to trading, Market structure, Capitalization and You.

This mental instability is not confined to the newbie, it can infect the experienced trader as well.

regards,
  • #103
  • Jan 1, 2010 12:39pm Jan 1, 2010 12:39pm
The market is going to do "what it wants" regardless of where one enters or exits. Obviously there is an element of luck that comes into play. You will never know where price will close 100 bars out, or even 1 bar out. But you don't need to.

All you can do is put yourself in a position where you can be correct in hindsight. Managing risk, managing the open position is skill. If you happen to be right or wrong on the trade, or how much you end up in profit - that's "luck".

It is not all entirely skill, nor can it ever be, because of uncertainty. If it were 100% skill then there would be no reason to ever be flat - you would always have to be either long or short. But in games where uncertainty is involved, sitting out has value. Thus, I have to say it's 50/50. But your win percent as it relates to the size of your wins and losses has nothing to do with how much luck/skill is involved in trading.

Happy New Year!
  • #104
  • Jan 1, 2010 5:23pm Jan 1, 2010 5:23pm
Is successful trading more dependent on skill than luck?

It depends on how you define each part for yourself..
If you think you can sit there and just randomly take postions everytime that you get a itch and expect “luck” to earn you a healthy bottomline.. then you must be out of your rabbit ass mind..
Now at the same token..
If you sit there and get all high about your “skill” and worshiping the shit out of it .. then also I must say you are out of your rabbit ass mind..

you can get lucky if you bet more on a higher probable sequences, instead of blindly coin tossing, random picking and etc.. lets just say that your “skill” will have a much easier time aswell if your betting just a lill smarter.
If you get all hung up on your skill, then soon enough you fall into becoming a pracitioner of perfection instead of simplicity of trading, and you certainly lessen the chances of the Luck factor.. (oh god I can go on and on about the psychy part of this, but no time, so just a hint)

You see.. they go hand to hand. now, don’t get me all wrong here.. I take skill over luck anytime, but how about looking at them both with a little more sense of rationalization. we can not get carried away with either one.. there is no, one or other.. we need both for our sucess.. as how everything is with trading.. one needs to incorprate a lot of different pieces inorder to taste profitability.

Now, about skill.. besides sound TA, Risk Management, psychologicall stuff (this is a big one) and etc.. if your don’t possess the two very important aspects that I am about to tell you, than your trading career is going nowhere with all the skill in the world!!! Ya I know it’s a tough cold statement, but its also a fact and you all know what I am talking about.
hey listen.. this is a tough business and trading it’s already in our blood.. it is what it is.. better to cope with the harsh and toughness, otherwise me and you better off to do something else.. its a big league game.

Ok.. Capitalizatio and Balls, the IT factor..(sorry, could not find a more of a fit word.. ummmmm I guess I could have used “Bold” or “Fearless”, but I just don’t think it would strikes as much.. )

You can have all the skills in the world, but possess less of these two.. ufffff you’ll have a tough time brothers.
Look.. If your looking to make a decent money that worths your time, than your trading account must fit to minimum of 50k!!! otherwise your simply undercapitalized.. and.. to be psyched up enough to use that capitalization to your advantage, so to enhances your Ballsyness (I think I just made up that word.. lol) to first of all, to pull the trigger without hesitation when your game plan tells you too (you got to be in it to win it) and to stand the fakeouts, market deceives and PA developments, before it turns back in your direction or not.. I find it very difficult to believe, by just the “skill” kicking in without the proper capital and the IT factor to make you success in the bumpy road situations.. it ain’t always a beautifull world, you know.. gotta have enough to roll with the bumps and bruise before victory.. Financial and Mental.

Now I see a lot of you make comparison to game of poker.. now, here is mine..

“The size of your Stack is equal or greater to your Skill”.. ok.. (Capital)

and I am not talking about silly tourneys that you watch on ESPN.. we’re talking big No-limit cash games upstairs of Vip Bellagios poker room in Vegas.. oh yaaaaaaaaaa. If I name the big guys that I have busted (some you seen on TV) on a total 7-2 off suit bluff you won’t believe me.. but believe this, that all credit is not solely due to my skill, but rather my “Stack”, the “B” word and certainly some “Luck”.

Happy Newyear everyone.
  • #105
  • Jan 1, 2010 5:59pm Jan 1, 2010 5:59pm
You dont need 50k to start trading live.
Annoying Precision
  • #106
  • Jan 1, 2010 6:16pm Jan 1, 2010 6:16pm
Is successful trading more dependent on skill than luck?

Definitely skill. Luck is too arbitrary and random
  • #107
  • Jan 1, 2010 6:40pm Jan 1, 2010 6:40pm
“Luck favors the prepared.”

Sometimes my experience gets me a trade. Then my consciousness says, "No way!", and I have to justify the next one on paper*. THEN I'm in trouble...

Skill removes a bit of doubt for luck to enter.

On which trade depends, wouldn't know.





* (working on this one)
  • #108
  • Jan 1, 2010 7:10pm Jan 1, 2010 7:10pm
Neither
Psychology is the most important factor in determining trading success. I'm going to go out on a limb here and ask you to consider that by addressing the area of your own psychology you will not only be increasing your skill but also your luck.

There are no set ups that work all the time, under all conditions.

It does take skill to discern a when a high probability exists. Skill comes from experience and experience takes time. Without addressing the role of your own psychology, you will not last the distance required to gain the experience to be skillful.
I stayed the distance because I treated trading as much a personal developement exercise as a means to profit financially. As I personally made improvements to the way I thought about myself, the more skillful I became and the less money I lost. I have been trading for 4 years but I personally know a trader who has been trading for more than ten years without success. He is a quantitative analyst and it hasn't even occurred to him that he needs to look somewhere other than the numbers for the success he seeks

There are no set ups that work all the time, under all conditions.

Here luck also enters the equation. When I first started trading I was relying soley on chance because I had no skill. I was unlucky - very unlucky. I was so unlucky I was convinced that my broker had someone watching my positions and moving the market just to my stop. My experience is now the opposite. Sometimes I turn on my pc and it just happens to be a good trade set up that I take and it earns my target with less than 30 minutes of screen time. Other times I turn on my pc and I see a set up that I missed but it failed anyway, These repeated events result in an equity gain over time that has more to do with luck than skill. I don't need luck but its a bonus side effect that I believe is a direct result of work done in the area of psychology.

The market is moved by human emotion. It is not surprising that the lack of importance given to this area corresponds to the fact the most market participants are not successful
BTC Return This Year: na
  • #109
  • Jan 1, 2010 9:41pm Jan 1, 2010 9:41pm
Quoting fxachilies
...
Look.. If your looking to make a decent money that worths your time, than your trading account must fit to minimum of 50k!!! otherwise your simply undercapitalized...
$50k = undercapitalized? perhaps to many (but not to all)...
but some people can make decent money off of less than 50k.

dont forget cost of living & lifestyle (among other factors) vary from person to person.

Happy New Year too!
  • #110
  • Jan 1, 2010 9:50pm Jan 1, 2010 9:50pm
Quoting fxachilies
Look.. If your looking to make a decent money that worths your time, than your trading account must fit to minimum of 50k!!! otherwise your simply undercapitalized.
I disagree 100% with that statement.
  • #111
  • Jan 1, 2010 9:56pm Jan 1, 2010 9:56pm
Quoting Rufus
Hi all.

I am lovin' the discussion here.

I am on the skill side of the camp. Once we enter the trade yes it is out of our control and we are at the markets mercy. But we limit the damage the market can do to us by getting out of the position, skill/discipline.

I like to think of all my study here on FF and other places as focusing my skill. Each thing that applies to me in how I think adds another piece to the puzzle. Which by the way is never completly put together.

My avatar was with 1860 technology. Every shot was an excelent shot....
I agree with what you said ( in bold ).

What was the reason for filing down the site?
  • #112
  • Jan 1, 2010 10:04pm Jan 1, 2010 10:04pm
Quoting M.A.C.Doug
Neither
Psychology is the most important factor in determining trading success. I'm going to go out on a limb here and ask you to consider that by addressing the area of your own psychology you will not only be increasing your skill but also your luck....
Good points.
but the variables involved in this thread does not include Psychology (only talking of 1. luck & 2. skill). if it did, then this thread would be much more colorful/interesting than it already is.

Having said that, i will respond to your posts by saying that i think Skill AND Psychology go/should go Hand in Hand.
good/correct Psychology WITHOUT skill will yield a different result when compared with a Psych & Skill combo.
a person/trader with good/correct Psychology WITHOUT Skill still needs to acquire Skill to perform the task at hand, which is trading.

just imagine a disciplined, focused, determined, calm, confident (but humble & zealous), non-greedy person will trade but is completely "trading-innocent" or "trading challenged": cant even look at charts, or cant operate a PC, or cant operate MT4/a trading platform, or dont know support/resistance, or cant compute pips or whatever. again, skill is required.

just adding in my view.
again, Happy New Year all
  • #113
  • Jan 1, 2010 10:54pm Jan 1, 2010 10:54pm
get r done junebug
Annoying Precision
  • #114
  • Jan 1, 2010 11:32pm Jan 1, 2010 11:32pm
Quoting hilmy83
it's skill, cause it's all about exits.
Thanks for few words only about the greatest skill in forex I ever understand in forex is exit & NObody like to tell it where .Sinply one place a good trade with all money management plan , sl etc . etc but having no appropriate tp/or any is simply a loss trade, traveliing ++1000pips it may hit the sl 1000 pips apart.so profit is no factor one should take it in time .likewise any random trade lowest lot size having min tp without any sl can be positive in time near 100% time.

fontu
Not understand?better not follow my analyses!doubt clearer first, risks ++
  • #115
  • Jan 1, 2010 11:51pm Jan 1, 2010 11:51pm
Quoting supremeChaos
Good points.
but the variables involved in this thread does not include Psychology (only talking of 1. luck & 2. skill). if it did, then this thread would be much more colorful/interesting than it already is.

Having said that, i will respond to your posts by saying that i think Skill AND Psychology go/should go Hand in Hand.
good/correct Psychology WITHOUT skill will yield a different result when compared with a Psych & Skill combo.
a person/trader with good/correct Psychology WITHOUT Skill [b]still needs to acquire...
Skill can be broken down into various areas in this case. I think a downfall in this age may be that many of us (especially the younger generation) are so good at working with computers and understanding the technical side of things that we forget the bigger picture. It's like an "architect" knowing how to model a home in 3D and draw in on paper but never learning some of the details that go with it like knowing all the federal regulations. You have the tool, you're really good at using it, maybe you're brilliant, but you will fail because you're completely oblivious to a part of the whole product. This is without even going into designing a home specifically for a person who wants to live there, their aesthetic taste, likes and dislikes which can make or break the final product. Now you may get lucky, the home you model will adhere to all the regulations, and the customer will love it but you won't build a great sustainable track record that way. I'm glad supreme brought up the idea of technical skills since I think they are often greatly over estimated in this day and age.

What we do trading our own money is complex and many over look this fact, I underestimated once I started because I had my computer skills and I thought I would be off to a running start. It seems easy, doable, but there are many parts to it. You have to manage so many types of risk before you even get started and open a position, and after that it's a whole other ball game once more.

Very interesting topic on skill vs luck and what the earlier guys said too, I enjoyed the opinion read.
  • #116
  • Jan 2, 2010 3:33am Jan 2, 2010 3:33am
Trading is 80% Skill. Putting on a winning trade requires absolutely no
skill but managing your Fear and Expectations does and thats where the
majority of amateur traders fail. A friend of mine puts out great trade calls
but doesn't act on some of them when he had small losing streak and hesitates. Those are generally the ones which would yield great profits putting him in positive territory.

Thinking about trades but not taking them only to see them unwind as you thought they would sounds familiar?
  • #117
  • Jan 2, 2010 4:09am Jan 2, 2010 4:09am
Quoting supremeChaos
$50k = undercapitalized? perhaps to many (but not to all)...
but some people can make decent money off of less than 50k.

dont forget cost of living & lifestyle (among other factors) vary from person to person.

Happy New Year too!
SC..

I did not say all..
we are talking avg guy with a avg household.. wife with a kid or two with a decent house and two cars perhaps. He’ll need minimum of 5-7K just to survive.. not to mention u got uncle sam up your ass too.. lol.. but I agree with you about living pereferance of everyone.. I was taking on avgs.
Thank you.


But I am not superised that most people don’t agree with my undercapitolized statement..

Gulfcostpip..
I do not want to get off topic here, but just a quick heads up here for you since your in a 100% disagreement with me. Keep in mind that in my last post I mentioned I do not rely and get all hyped up on just one or two aspects, but rather keep a rational balance between combination of all aspects of trading.. (skill, psychological, MM..etc..)

If your considering risking 2% or higher on a given trade, then you are correct.. but an a experience trade perhaps such as yourself should know what the consequences are for such high risk taking would be.. I guarantee you will feel the psychy stuff 100 times more when managing a trade and that could eventually lead to all kind of problems.. after all we are humans and only a fool can think that he can hide his emotions all the time when dealing with a fakeout or a trend-against.. wooooooo..

Check out brother..
50k / half% = $250 / 25 pips sl = $10 trade size( 1 lot)
If you go for a 1:1 RR then avg daily gain would be $250 x 22 working days = $5,500 monthlly profit.
To make a decent living u need to bet atleast 1lot..
You trade at ease.. why? Bcz, you have considered the worst case scenario here.. you will need to lose 200 trades in a row in order to be out of business.. what it does it separates your from money side of this game, and that is huge boost for psychy.
This will take care of all the nigthmare feelings such as.. fear, hope, greed and increases your patience.. so you’ll able to let things develop at ease instead of making a premature decision.

Now think about it.. which guy would have a higher chance of succeeding... the guy with a smaller account with higher risk or the guy with a bigger account with lower risk.

I am not looking for a debate or anything my friend.. just my humble opinion and way of doing things my way that’s all.

Happy Newyear to you and your family.
  • #118
  • Jan 2, 2010 4:29am Jan 2, 2010 4:29am
I think the problem of 95% who loose money, is that they are beliving in myth of forecasring. To make money on the markets, forecasting is not a key! You can make good forecasts, but where is value from your forecasting? So maybe that you calling "luck" is using another way on the markets, instead of forecasting.
  • #119
  • Jan 2, 2010 4:48am Jan 2, 2010 4:48am
Quoting fxachilies
Check out brother..
50k / half% = $250 / 25 pips sl = $10 trade size( 1 lot)
If you go for a 1:1 RR then avg daily gain would be $250 x 22 working days = $5,500 monthlly profit.
To make a decent living u need to bet atleast 1lot..
[font=Calibri][size=3]You trade at ease.. why? Bcz,...
at 0.5% risk on 50k after 200 losing trades you still have 18,440.04 in the account. It takes about 920 losing trades to drop down to the point of being below 1 micro lot traded.

at 2% risk per trade it would take 228 trades to drop below the point of 1 micro lot.

Not trying to nit pick but most people miss that calculation. This happens because the lot size decreases with the decrease in account balance.
  • #120
  • Jan 2, 2010 10:12am Jan 2, 2010 10:12am
Quoting ha-pattern
“Luck favors the prepared.”

Sometimes my experience gets me a trade. Then my consciousness says, "No way!", and I have to justify the next one on paper*. THEN I'm in trouble...

Skill removes a bit of doubt for luck to enter.

On which trade depends, wouldn't know.





* (working on this one)
Yes, luck does...

"You have to be in it, to win it."
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