Luck vs Trading

colonial dr · Nov 12, 2012

Myself and others had a discussion about traders, both new and old, confusing nice equity curves as real trading when it is just luck.

A hundred descretionary trades can easily be luck- imo. Especially when draw downs between trades.

Old trades who have lost their skill or edge can also think it is good that they are at least holding together. This is luck too.

Have you ever thought you had an edge or skill, but found out over the longer term that it was just luck that proved to be a false theory?

I would also love to hear anybody who has ideas about how to quantify luck in trading.

kut2k2 · Nov 12, 2012

Quote from colonial dr:

Myself and others had a discussion about traders, both new and old, confusing nice equity curves as real trading when it is just luck.

A hundred descretionary trades can easily be luck- imo. Especially when draw downs between trades.

Old trades who have lost their skill or edge can also think it is good that they are at least holding together. This is luck too.

Have you ever thought you had an edge or skill, but found out over the longer term that it was just luck that proved to be a false theory?

I would also love to hear anybody who has ideas about how to quantify luck in trading.

http://www.amazon.com/Evidence-Base...e=UTF8&qid=1352755153&sr=1-5&keywords=aronson

trade_canada · Nov 12, 2012

It's extremely difficult to achieve consistent results without a consistent approach. It is possible to achieve consistent results through discretionary trading if you have a consistent thought process that goes into each trade.

bone · Nov 12, 2012

Quote from colonial dr:

Have you ever thought you had an edge or skill, but found out over the longer term that it was just luck that proved to be a false theory?

From my personal observations, this is almost always the result of substandard or disorganized position ( money ) management. Having said that, markets are constantly changing and that is the only "constant" in trading quite honestly.

Problem is, everyone concentrates on the entry signal and they completely discount or flat out ignore how they manage and capitalize a working position. This forum is dominated by hacks who do not know how to correctly take a loss. Really good traders take a loss every single day they are at it. Seriously.

bogan22 · Nov 18, 2012

Quote from bone:

From my personal observations, this is almost always the result of substandard or disorganized position ( money ) management. Having said that, markets are constantly changing and that is the only "constant" in trading quite honestly.

Problem is, everyone concentrates on the entry signal and they completely discount or flat out ignore how they manage and capitalize a working position. This forum is dominated by hacks who do not know how to correctly take a loss. Really good traders take a loss every single day they are at it. Seriously.

You've mentioned this point a lot in the past. Managing a working position is of great interest to me. There seems to be endless variety/complexity in how that could be acheived with related instruments or scaling. Or, is simple best, trailing stop, move it up and down until hit. Any views Mr Bone?

Regards
TheHack

mm19 · Nov 18, 2012

Quote from colonial dr:

Myself and others had a discussion about traders, both new and old, confusing nice equity curves as real trading when it is just luck.

A hundred descretionary trades can easily be luck- imo. Especially when draw downs between trades.

Old trades who have lost their skill or edge can also think it is good that they are at least holding together. This is luck too.

Have you ever thought you had an edge or skill, but found out over the longer term that it was just luck that proved to be a false theory?

I would also love to hear anybody who has ideas about how to quantify luck in trading.

been there done couple of times. Technical systems are notorious for suddenly reversing the edge.

moved to another level and see market as multidimensional. price action is one dimension only. I include now news, sentiment and fundamentals, one dimension each. PA is last one to wory about. However, I still have rule to papertrade after 3 risks down from high account point, just in case.

Covertibility · Nov 18, 2012

Luck only exists in the short run.

the1 · Nov 18, 2012

No doubt there is an element of luck in the markets. Luck is present in every adventure that attempts to predict the future. I doubt a string of luck would stretch among 100 descretionary trades. I imagine that is mathematically impossible. What is likely happening is a change in market behavior rather than continous luck. I've experienced both.

Quote from colonial dr:

Myself and others had a discussion about traders, both new and old, confusing nice equity curves as real trading when it is just luck.

A hundred descretionary trades can easily be luck- imo. Especially when draw downs between trades.

Old trades who have lost their skill or edge can also think it is good that they are at least holding together. This is luck too.

Have you ever thought you had an edge or skill, but found out over the longer term that it was just luck that proved to be a false theory?

I would also love to hear anybody who has ideas about how to quantify luck in trading.

Bry · Nov 18, 2012

The more trades that are placed by a single individual in a single account, the less chance any success is due merely to luck. I personally think 100 trades is way too many for luck to play a role in success. The more leveraged used, the lower the number.

Monkeys throwing darts at stock lists will win big during bull markets and lose during bears. Let monkeys trade futures and they will blow up quickly due to the heavy leverage.

However, the best traders are probably the luckiest too. Their subconscious minds prod them to get into a trade at just the right time. Or their hard work, watching the market for hours and hours until they feel the timing is right to get in makes them luckier than the lazy trader who is watching a movie instead.

jnbadger · Nov 18, 2012

Quote from Bry:

However, the best traders are probably the luckiest too. Their subconscious minds prod them to get into a trade at just the right time. Or their hard work, watching the market for hours and hours until they feel the timing is right to get in makes them luckier than the lazy trader who is watching a movie instead.

Sounds like a difference of opinion as to the definition of "luck".

I don't think anything you just described has anything to do with luck.

Granted, you need to continuously put yourself in a position to be lucky, but watching a movie and missing a trade has nothing to do with being unlucky. That's just a lack of effort.