A Message to Those Who Think Trading Depends on Luck

If you want to get on my bad side, tell me that trading involves a high degree of luck. Nothing gets me going more than that- especially if you’re very adamant about your view. I’m usually quite calm, composed, and level headed. But when I hear those words, they get under my skin.

You see, trading is one of the toughest pursuits out there. Something that will test every ounce of spirit you have- only to make you dig deeper. Something that requires you to develop yourself to a greater degree than most people even know is possible. Something that takes years to truly master. And so when you claim that trading depends on luck, you’re personally insulting me. You’re saying that the result of all my effort and years of practice hang on the flip of a coin. And you’re assuming that I’m gullible enough to keep trudging on despite that.

So if you believe that trading depends on luck, I have a message for you: You know nothing about trading or luck.

Luck means randomness. Or in statistical terms, a random probability distribution. But what would you know of statistics to actually understand that. And trading is all about edge, which by definition means a non-random probability distribution. This, you do understand, because you’re regularly at the wrong end of it at the casino. And of course that’s where you spend your time looking to get rich because the only way to get rich is to get lucky right?

But while you’re at the casino, I’m honing my skills. And when you’re rolling the dice,  I’m honing my edge. And when you decide to “play” the market to see if you can get lucky like all those professional traders (who seem to get lucky quite often don’t you think?), I’ll be there to take your money. Because I am the casino in this domain. And you’ve just entered through my doors.

So go on, tell me it’s all luck. Tell me that I must be lucky because I somehow make money every single month. Tell me that I got lucky that the market went up when I actually made all my money shorting into the blind euphoria created by people like you.  Tell me whatever you like. You may get under my skin, but I’ll be taking your money.

  • zyzz

    umad brah?

    • lol no guys… just making a point I felt needed to be made ;)

  • pistolpete

    u mad broski?

  • EasySkanking

    Haha, I found this post hilarious :). What’s wrong with being mad? I’ve had some of my best performances while being mad – mad causes you to take action. It’s also not good to get mad too often though, just when necessary. Being mad does empower you but if you allow it to linger too much, it also disorients you – causes you to miss important details… it’s a good temporary fuel when inaction has become too much.

    Even if he did write this while being mad, he made a lot of good points in it. And it was funny as well, so what’s not to like? I guess the only ones that would take offense are those who indeed think that trading is luck.

    I also have trouble dealing with ignorant people, but I’m working on it :)

    “When you are offended at any man’s fault, turn to yourself and study your own failings. Then you will forget your anger.”

    From my experience, often when we become mad at others, it is not so much because they did something that would make us mad, but because we got mad at something they did (even if it’s not worthy of being mad at).

    They’re just ignorant, why should we get mad at them for that? It’s not hurting us in anyway… they’re just ignorant and we’re just earning money. We have to realize that we cannot make people understand something, we cannot change people – we can barely make *ourselfs* understand and change ourselfs – we don’t have enough energy to change other people! :) Let them be, and realize why you are getting mad at them for being ignorant.

    Sorry that I could not write a more concise comment, but I don’t have much time at the momment. Good post Ziad!

    • Thanks for the comment, and glad you enjoyed the post :) Everything you say is true, and I often secretly thank people who get under my skin because it causes me to look internally and evolve as a person. But sometimes it`s still fun to let them hear a piece of my mind ;)

  • Paul

    Excellent message! I cannot talk to anyone hardly at all about my trading because all of the sudden they are experts at the markets. And most have never bought a share of stock in their life. It’s funny how there are so many experts at what they cannot do. Also someone would tell us it is luck out of their own jealousy.

    • I know how you feel Paul! And yes I do believe there is a certain amount of jealousy tied to it.

  • berzerk

    Is this a way to challange all the lurkers so that get emotional and start commenting instead of just lurking? then I think it’s a good one.
    “But what would you know of statistics to actually understand that”
    to which I could say – but what would you know about luck to actually understand that?
    Were you lucky when the market went your way or it’s because of your skills? Were you unlucky when the market went against you or your analysis was wrong?

    When you ask a professional trader how much depends on luck and how much on skills in his trading, I’m not sure he’d be able to give an exact answer. Trading is about probabilities and sometimes one is lucky to be on the right side of the market………….

    • To understand why there is no luck in trading you have to differentiate between the short-term and the long-term. In the short-term, luck is very present. But in the long-term, luck completely cancels out and one`s ultimate trading results are determined purely by skill. You can understand this when you look at a coin toss. If you toss a coin 10 times, you can indeed get unlucky and get 9 tails and only one head, even though the probabilities are 50 / 50. This is short-term luck. But if you toss the coin 10,000 times, you are virtually assured that you will get somewhere near 5000 heads and 5000 tails. In statistics this is called the law of large numbers, and when you have a large enough sample the short-term luck cancels out and the probability distribution plays out. This is how casinos make money consistently even when they sometimes get “unlucky” when a person goes on a hot streak on a particular day. Taking that over to trading, if you take a few trades, yes you could get “lucky” to be on the right side of the market. But unless you’re truly skilled and have a real edge, your luck will eventually be cancelled out with enough trades due to the statistical law of large numbers. In the end your results will be based purely on skill.

      • berzerk

        interesting perspective, makes perfect sense, thank you.

        • You’re very welcome.. thanks for the chance to explain further.

  • czechm8

    Totally agree. The “luck” comment reveals that the speaker has failed to grasp the point of trading. Yes, it does have probabilities associated with it, but really no “luck”. Conceptually I am averse to luck, as I think there is no such thing. Understanding probabilities kills luck conceptually.

    As always, this was a very good comment Ziad.

    • Thanks. And yes the key is to truly understand probabilities and train our minds to think via odds. That makes all the difference in trading.

  • pro-trader

    What makes trading even more difficult is that people than can’t ‘make it’ trading become educators or indicator sellers… I was just able to learn to trade once a professional trader started to teach me out of my misery and took me over 2 years to be able to follow him… so if you are out there and want to become a trader, just find a ‘very successful’ professional trader, ask him for his live trading records (a lot of people talk a big game on this business also, but are in reality break even or losing traders…). Be careful out there, because the ‘real professionals’ and supposed ‘educators’ will take your money… If you want to join some education class or room, ask for the educator live trading records (most will not show you, then move on), you don’t learn this hard business from someone that is not in the business day after day fighting the markets… !

    • Thanks for the comment. People should definitely be careful about who they look to learn from. And seeing a real track record is a good way to separate the pros from the charlatans.

  • No such luck as luck in this trading world……..

  • Andre

    I think that traders will depend on luck if they are not consistent with their decision making. It is important to be consistent on how to explore your edge in the market, so that the law of large numbers, as Ziad said, will manifest itself. If we keep changing our decision making process on the setups, I think we can erode the underlying edge easily.

    • Great point Andre. I absolutely agree. Consistency is key if we’re ever going to be able to realize the probabilities associated with any edge.

  • BYAMUKAMA ALEX

    trading is all about commitment with what one is aiming at.soliciting the start up capital,having a good customer care.

  • jeff

    there is no way to prove there are any odds at all in the markets…absolutely nothing is measurable. commissions is the only way they make money…i wish someone could prove otherwise but notice everyone uses a website to make money or some training service after they have luck…its wishful thinking but when anyone can enter a trade at anytime, you never know who will enter

  • dan

    When i speak of luck..I mean buying puts accidentally instead of calls or vice versa,sudden platform freeze,lost internet connection,being sick on good trading days etc.I never had a winning trade by “accident” .How come when i buy puts accidentally instead of calls it always a losing trade..

  • Eduardo

    I’m sorry but all the information you look at, all the analysis you might perform, all attempts to explain or predict moves in the market are much more random than you think. If there was some, a greater number of traders would perform quite better than usual. Try to observe your performances from your early begin until now, then compare it to a significant number of other traders you may consider skillful, than start to make a statistical analysis of it, the distribution will look much like each other. But don’t get this wrong, I’m not saying your work is less appreciable than a gambler’s, but don’t think you’re too well informed about trading and probabilities to be so confident about it.

  • Saint

    Its all luck you shill

  • Paul Allan

    lol even monkeys can beat the best stock expert:

    http://www.automaticfinances.com/monkey-stock-picking/

  • Discobolus

    Before reading your post, I thought successful trading was mostly about luck. Now, I think it’s about luck… and ego.

  • Awais is a bitch

    How’s it feel like to be completely full of shit and lying to all of your customers? Show us that you actually make money from trading and not just from scamming people.

  • Michael

    In a casino, people who can count cards have an “edge” over the casino, just as Open Trader methodology gives us an edge over other market players (the casino.) But what most people don’t understand was explained to me by a card counter, who had been banned from casinos in Las Vegas. Even a good card counter, who has an edge, can lose a hand because each turn of the card is a random act. Card counting usually is not depicted this way in television and movies. The card counter wins every hand he pushes on. People gather to watch and cheer. Wrong! He just has an edge and will win more often than lose and win more when he wins than he loses on a loss. He has an edge, but each turn of the card is a random act and some luck is involved. But in the LONG RUN, due to the law of large numbers, the player with an edge will win much more than he loses. And even though each turn of the card is a random and luck comes into play, the player has the edge over the casino and will come out ahead. So a loss doesn’t matter, when the player (card player or trader) has an edge, because that edge ensures by the law of large numbers, that he has a winning advantage and he will make much more money than he loses.

    As an example, statistically, every trader has something like an 80% chance of at sometime in his career having 10 losers in a row. However, the statistics are also 80% that he will have 10 winners in a row. Having an edge means that luck is only on each turn of each card. The statistical advantage of having an edge means that most of the time, like the card counter, your know what card value is most probable of showing up (but is not guaranteed) and your payoffs will be bigger than your losses. And, you will have more winners than losers.

    Just like counting cards, trading a good system that gives us a statistical edge takes time, dedication, and practice. The four cornerstones of a successful trading career I believe are (1) a good system, (2) dedication (3) practice, and (4) time. Unless you’re a savant, it takes time and practice to put all the pieces together, know what you’re seeing, and instinctively know what to do. But that’s what it takes to have an edge.

    Just to be clear, and in full disclosure, I’ve been sim trading for almost 3 years and over 2 years with other training companies that did not have an edge. The first company convinced me I would make money right away, and I lost about $5,000. I stopped trading live and have I since recorded each trade. My equity curve was flat to down until I started Open Trader. My equity curve has dramatically changed, is on a nice, healthy incline, and has only fell below a 20 SMA ( which I have charted on my equity curve,) one time in the 7 or 8 months I’ve been with open trader. For me that’s a red flag to stop trading and examine my trades, or take a break. So, I’m not a professional trader. But I now see (statistically) that I definitely have an edge and that I will be a professional trader, consistently profitable. This is why I think time (time=experience) is an important cornerstone of trading and, albeit much of mine was with trainers teaching wrong concepts, I nonetheless learned through constant practice what doesn’t work and then, what does. Sorry for going a bit off topic but I thought it was related and important.

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