Where Trading Falls...Luck, Skill Or Both

What you thought about it, where your trading journey falls and what approach you finally wanna take?

I would say both. Not sure what is more prominent.

I think luck is involved one way or another before you are even born till the day you die. Bad or good, i donā€™t know.

But one cannot just credit or blame everything that happens on luck as some do.

Skill and luck equation in life itself is quite complicated. You can apply that to trading too i guess.

I maybe wrong i maybe right, I donā€™t know.

Now my mind is blown :exploding_head: thinking about this.

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Good thing about trading is its zero sum game.

If some strategies i feel is against my psychology or against conditions, i just do 180 degree flip.

What really helped me is journaling till the point its sorted.

Trading is only Money Management skills and game of probability(some call probability luck but its pure probability)

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If you have an edge, then luck in the short run, skill in the long run. But some element of luck will always be there as edges fluctuate too.
Without an edge, its all luck and in the long run, luck will run out almost certainly.

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Skill - I code, backtest and deploy strategies. Skill required here is to read, think and code.

Luck - Something that I find when I persist with my well tested and well rounded strategies over a fair period of time.

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Let assume,
you got 2 stoplossā€¦and according to your trading decipline, you should now close your trading terminal/laptop immediately.

Now, you opened chart in eveningā€¦ And you found that market has given a very good move which is according to your setup after sometime you closed your trading terminalā€¦

Note thatā€¦ If you remain in tradingā€¦ You have got profit which is equal to many profitable trading days aloneā€¦

Now, whatā€™s your reaction will beā€¦?
How you will approch thisā€¦?

Whatā€™s your psychology gonna beā€¦? Will it impect your mindset or the setup changes or notā€¦?

I think youā€™ll gonna react to it differentlyā€¦

  1. Real loss of money is always always greater than opportunity loss. Opportunity will come again again but once money is gone its gone.

  2. If your rule said just stop then stop , maybe you can retrospect if number occured again and again so you bends your risk management rule but never forget about point 1 its just doesnā€™t make sense for long term that you can grab every opportunity or saved in every pit or even looose in every pit or loos the great opportunity.

  3. Your Risk management should cover once in 10 -20year event but your startegy should not be built around those 10-20 year events.I meant black swan events.


It also suggests your view being about systematic trader or discretionary traderā€¦

Which one you think betterā€¦

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Systematic discretionary trader what works for me.

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Only systematic traders who lack conviction on their system change. Others donā€™t.

If the system is well tested with a really deep sample of data covering wide array of market patterns it doesnā€™t warrant a change unless one sees something that was never seen before in the performance metrics.


What I think is that, there is a lot to learn, and this learning can be to put to use in the market manually or with a system, and the rest is psychology, even money management is psychology, this personal angle exists in trading or investing. Until the personal element is removed, it could not be 100% systemic. While I acknowledge systems, I tend to look for discernable things.

AI - Data shows 98% of people are fools.

Me - Why are 98% of people fools? Am I a fool? :grin:

The systemic part is scientific, mathematical, logical, automatic, the personal part is psychological, this is the reason why even the great minds in the market have made mistakes, because they are human. Warren Buffett has made mistakes, George Soros did, even Jesse Livermore.

Unless one is of a certain age, mistakes happen more, because the outlook towards life gets reflected with the market too, the inexperienced eyes and mind fail to discern the complete picture, I have seen this with investing. Of course there exist some young people who take matured decisions, but that is mostly because they are intelligent.

Luck does exist, may be some people donā€™t want to acknowledge even when it happens to them, only they know. It happens with investing, no one expected Bajaj Finance or some other stock to become what it is today, not even the management too sometimes, the scale something reaches cannot be determined always. Even Bill Gates failed at predictions. So sometimes we get a bit lucky, sometimes more, only we know that.

Investing is as vast as trading, and it takes a while to settle down with a particular style of investing, it is all but natural to make some mistakes till that point is reached. I guess same with trading too, takes a while, perhaps quickly because there are systems involved.

I have also seen people quickly settling down with a particular way of doing things in the market, because they have found what works for them.

Socrates said ā€˜know thyselfā€™.

So Himanshu, apne andar jo rehta hai, usko doondna aur poochna ki, wo kya chahta hai, jor lagake chillana, bahar nahi, andar, jawab mila to, kadam sahi raste par lagega :grin:


Itā€™s like Dream 11. Mix of luck and skill. You need both on your side to be successful.

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After reading all others opinions and thinking thousand times, what i came to is skill is part of what we can do and luck is part of what market can give.

What market can give is never under our control but what we can do is under our control and can be enhanced.

Hence, we should only focus to continuously enhance our tradings skills and take whatever market is givingā€¦but if we start focusing and trying to grab on what market is giving, then bankruptcy is not farā€¦:lollipop:

this is really good conclusion, i am loving this.

you are 1 million percent right boss.

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