I have always wondered how much of what we attribute to people's success is down to luck. I suspect we underestimate the part luck plays in our lives. I think Bill Gates is one example. The only certain thing we can say about Bill Gates is that he is very rich. I will be very surprised if it turns out that he was the best software developer around. Look at the history. In 1982 IBM was worried that Apple's new PCs were threatening its future. They picked up Intel and a geek called Bill Gates. It could have been any other kid with an aptitude for software development. It could even have been Apple itself. It is just a matter of how people decided to proceed at the time and who was there when it happened. If IBM joined forces with Apple, we would all now be using Apple instead of Gate's Microsoft. The strange thing is we ignore all the failures and try to 'learn' from the one's who 'made it', even though, more likley than not, there really is nothing to learn. If I have to bet on it, I would say Bill Gates doesn't know any more than a lot of people about the 'secrets' of success.
My pet hate is the 'pro' trader. This is really funny if you met people who make money trading. The majority are lucky idiots who haven't Got caught out yet. And they will, it is just a matter of time. If some fearless fool risks 10% per trade and makes money for a while, everyone wants to know his 'secrets'. On the basis of what? Well, maybe 6 months, or even a year's action. Can you tell if someone is good or just lucky by looking at his past prformance for a year or two? No, definitely not. You need to look at a lot of things besides his bank balance and where he goes on holiday. In Bill Gate's case, even if he was lucky, he also owns a product that everyone wants and uses. So you will never, for sure, know whether he was a lucky idiot or not.
Our respect for success is rather ridiculous. So when somone says they make x% a week or whatever, we immidiately go 'EVEN THE WALL STREET PROS DON'T ACHIEVE THAT'. That is such a stupid statement because it makes the assumption that someone, by the mere fact of working for some bank in wall street, is not only good, but better than everyone else who doesn't work in Wall Street. We assume that you are good at trading if you get a job at some City firm. My guess is they are no better than anybody else. It is just a matter of time before they blow up and are replaced by another lucky idiot who will last for a while until he blows up, and so on.
My point is this: we shouldn't fool ourselves into believing we can 'learn' from those who are visible (i.e., the ones who 'made' it) because more likley than not they are just lucky. They may be good but, in most cases, they don't need to be better than the ones who didn't make it. Think about trader A and B. Both leveraged 400:1 put on a trade on EURUSD in january 2005. A goes short and B goes long. A makes millions and B gets wiped out. A writes a book called 'How I made millions from one trade', and B writes a book called 'How I lost everything on one trade'. A, naturally, will fill his book with a lot of chart setups that look really good and so on. I am not going to ask who will sell more books, yet it was purely a matter of luck.
It takes a highly descerning mind to know what can be learned from and what is a matter of luck. I don't pretend to have such a mind but, at least, I am aware of the risk.
All the best.
