Traders & "Luck"

fxtrader85

fxtrader85

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Hello fellow traders,

Recently joined the forum and inbetween trading it would be good to interact with other traders and likeminded people. The issue of luck and trading has always been one that's intrigued me...

A friend of mine started trading about 3 years ago after inheriting £10,000 from a family member. He said he didn't want to just leave the money in a bank account so he opened up a spreadbetting account with one of the big boys and put the full amount in. He had no knowledge of the basics of trading or how spreadbetting worked or none of that. He started off by betting a pound per point on various shares and slowly but surely saw his account size grow. At this point he knew the basics of spreadbetting but hadn't read about strategies, read trading books, developed ideas from forum posters, none of that. He was just betting on what he thought would go down, and also what he thought would go up. He then started to up his bet size to £10 per point and he said at this point he had a largeish loss and realised all the time he was spreadbetting at the start he was literally one bad market move from being wiped out. He carried on, just trading off the fundamentals and looking at candlestick charts. A year later, he was just under £500k up. In a year ...

Which brings me to my point, how much does luck play a part in a successful trader, if it does at all. In my opinion, he was extremely lucky. I remember years ago thinking succesful traders must all be uber intelligent, shrewd and savvy but my friend certainly isn't and others I have come into contact with who are "successful" traders didn't come across as particularly bright either. I suppose for every story like the one mentioned above there's 10 that detail the exact opposite, so that's probably an indication that luck does have some part to play.

Opinions?
 
500k?! wow. Nice to be him.
Someone I know turned about £6000 into just over £100,000 in about 1 year through spreadbetting.
They quit while they were ahead and admitted that they believe it was just down to luck.
 
What happened to him then....?


$64,000 question, to my mind.


I would like to think he kept it all, and didn't blow it, but.....
 
fxtrader85 said:
Hello fellow traders,

Recently joined the forum and inbetween trading it would be good to interact with other traders and likeminded people. The issue of luck and trading has always been one that's intrigued me...

A friend of mine started trading about 3 years ago after inheriting £10,000 from a family member. He said he didn't want to just leave the money in a bank account so he opened up a spreadbetting account with one of the big boys and put the full amount in. He had no knowledge of the basics of trading or how spreadbetting worked or none of that. He started off by betting a pound per point on various shares and slowly but surely saw his account size grow. At this point he knew the basics of spreadbetting but hadn't read about strategies, read trading books, developed ideas from forum posters, none of that. He was just betting on what he thought would go down, and also what he thought would go up. He then started to up his bet size to £10 per point and he said at this point he had a largeish loss and realised all the time he was spreadbetting at the start he was literally one bad market move from being wiped out. He carried on, just trading off the fundamentals and looking at candlestick charts. A year later, he was just under £500k up. In a year ...

Which brings me to my point, how much does luck play a part in a successful trader, if it does at all. In my opinion, he was extremely lucky. I remember years ago thinking succesful traders must all be uber intelligent, shrewd and savvy but my friend certainly isn't and others I have come into contact with who are "successful" traders didn't come across as particularly bright either. I suppose for every story like the one mentioned above there's 10 that detail the exact opposite, so that's probably an indication that luck does have some part to play.

Opinions?
Click to expand...

If he was SBing equities then I'd suggest his only *luck* may have been being involved in the bull market, or the bear market rally that we've witnessed over the past twelve months or so...However, was he lucky to find SB as a career choice, to develop an edge (whatever his is, he must have one), to hold his nerve, to up the stakes to perhaps 50 ppp, to make himself available to take every opportunity, to have the self-discipline to stick to his plan, trade through the draw down days...?
Nope, luck plays no part in trading whatsoever...;)
 
My take on this is that he majority of trading methodologies return a random distribution of gains and losses. That holds true for both negative and positive expectancy methods.

On top of that, other random events can occur that influece an outcome. These may be external factors beyond your control, or changes in trader behaviour due to psychological issues, health issues, the weather etc.

There's a random outcome as these two random components interact.

Luck plays a major role in practically everything you do. The key distinction is that some people have the ability to recongnise that and exploit the opportunities, and some dont.
 
Hello,


Ya you are totally right that luck always play a big role in trading. yes, it is necessary that luck is with you when you do any business some of my friends also a trader and they make few to many and luck plays important role in that. so being luck with you it is very necessary.


thanks!!


____________
 
Last edited by a moderator:
advfntrader said:
500k from 10k ! and 100k from 6k....sounds way overleveraged to me
Click to expand...

indeed.
The guy I knew who started from 6k began betting at £10 per point on the DOW after demo trading for about 2 weeks, and within about 3 months, if memory serves me corrrect, he was trading at about £120 per point!
He was having daily account swings of about £20,000 some days. Like I say, he was smart enough to realise he had just been lucky. He walked away with, I think, about £80,000 from his £6,000 initial investment.
 
What you have to remember is that for every story like this there are probably > 100 stories of riches to rags in the same timeframe and no matter how special you think you are - you are most likely going to end up in the category with the greatest probability.
 
Hoggums said:
What you have to remember is that for every story like this there are probably > 100 stories of riches to rags in the same timeframe and no matter how special you think you are - you are most likely going to end up in the category with the greatest probability.
Click to expand...

Absolutely
 
lucky just means you beat the odds, over a prolonged period of time the probabilities have a tendency to 'fix' you....
 
Luck is less evident in trading as the years progress,..also just a matter of perspective.
I was unlucky(back then) to loose thousands of pounds when starting out,..but looking back, I realize how lucky I was for loosing said units of currency, for its edification! : )
 
Hilarymannah said:
Luck is less evident in trading as the years progress,..also just a matter of perspective.
I was unlucky(back then) to loose thousands of pounds when starting out,..but looking back, I realize how lucky I was for loosing said units of currency, for its edification! : )
Click to expand...

Good post. Some good replies. advfntrader - Why would I lie about someone elses story? He definitely, definitely turned 10k into just under 500k. He doesn't trade anymore, I think he made his thousands and now wants to enjoy it, can't say I blame him!

As the quote above says, I think luck can/does play a part but as time progresses it becomes more about the skills of the trader. Another point to make, he wasn't exactly into money management and only risking 1-2 % of account equity on any one trade, he did "risk" a lot...
 
Luck plays a huge part. It's a consequence of the zero sum nature of the game. It's why fund managers struggle to consistently beat the index when actively managing a portfolio rather than using a passive buy & hold strategy. Transaction costs which make it a negative sum mean that even fewer participants are net positive. You need time to reveal the skill and filter out the noise of luck.
 
Luck may make you a fast buck, but bad luck can always rear its ugly head. Skill is what you need my friend as it helps you spot where bad luck lurks.
 
I didn't doubt your story fxtrader. I guess I just wish it was me that is that lucky !!
 
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