Did you understand what dandxg said here? (an important comment) If ever in history a favorite (that is should have won based on skill measurements) seed actually lost to an inferior player, then in that particular case, wimbledon WAS won by chance wasn't it? One negative proves the supposition wrong and infinite cases can't prove the supposition correct. AKA black swan. So why play wimbledon at all then. We could just compare skills and save airfare. And in the trading case, we could just go on the honor system and mail our cheques in to MAESTRO for how much we would have lost betting against him/her! Trading is like Wimbledon that the best skills will win most of the time, but luck plays a part even in the hands of the best skilled trader in the world.
Could you win Wimbledon? If you can't distinguish Wimbledon victories from chance... Why not? Winning wimbledon takes extreme skill. I suppose an improperly tightened net cord could make a difference and cause an opponent to win an extremely close match... but the person still had to use extreme skill to get to match point against an opponent... and To get to that final that person had to show extreme skill. Luck may vary the payout... but luck did not get him the opportunity to get to the final. He had to have great skill.
its not about winning vs. losing trades its about how much money u lose vs. how much money u win winning and losing trades do come in a random distribution u should preserve your capital , the money comes in sooner or later even if u have a 70% hit rate , doesent mean u win 7 out of 10 trades .. the edge might kick in after the 50st trade.. the question is would u still have the capital then ? and if so , would u be able to milk it properly ..? like the all to well known story of the blackjack card counters , they had a proven edge , but they couldnt not say that they win every hand wich is dealt , they needed to bet small till the edge kicked in, and if it kicked in , they startet to bet big...
Dude, you are speaking my language - congratulations on being totally awesome. I get you. Don't ever change.
Does... Not... Compute... Brain... Exploding... Must... Hold on... To... Sanity... Please... Help... To... Stop... Cannot...
Perhaps jack having proactively gone out of his way to minimize luck, would care to donate the chunk of luck that he's not using, I will quite happily take it off his hands, hey I'll even pay a generous rate for it. I've spent the last 10 years learning to capitalize on good luck, but then I would wouldn't I
I would argue that the concept of luck doesn't really apply in markets and trading, given that markets are always changing and that each real-time setup has a virtually unique set of conditions. The mirror-image of this would be the concept of skill in a game of pure chance with a fixed set of conditions, say electronic roulette. One would need to drill right down to the exact impetus behind each trade a trader places to determine whether his results were truly "lucky" (aka a temporary anomaly that masked an actual lack of edge) or instead born of skill/information/edge. But, take any "true" edge that eventually deteriorates over time, and take a trader who was the very first to discover this edge yet cannot change his method to adapt to market shifts over time -- his results be virtually indistinguishable from a temporarily "lucky" trader who was just betting on hunches and had a good streak. Both will end up broke over the long run. LTCM ended up broke yet were their initial successes pure luck? And what about all those retired market "wizards"? The concept of luck just doesn't apply in practice. In this light, it's not surprising that Livermore once said no man can ever beat the general market over time - perhaps he meant that eventually the very thing which grants a trader success in one period will be the exact source of his downfall later on? What place does "luck" have there?
Ok, I will contribute. Letâs do a mental experiment. I would flip a coin and decide whether I will be Long or Short one contract of ES for 1 point. If I lose 1 point or win 1 point Iâll exit and flip my coin again. So, assuming my coin is fair and I pay no commissions then I would expect a natural âdriftâ of my equity line of D = sqrroot(2NG/pi), where N is the number of flips and G - is the ES point value. If after N flips the absolute value of my gain/loss is less or equal to D then I cannot consider my success (failure) anything but a natural drift of a random walk. If after P trials of N coin tosses my average absolute gain/loss is greater than D then my confidence of me playing better (or worse) than a normally distributed random walk is directly proportional to P. That is all to it. Cheers, MAESTRO P.S. You can easily modify this experiment to answer your own questions. You can modulate the walk with your average gain/loss, you can add commissions etc. However, the experiment itself is a universal measuring stick to assess the âskewâ of your personal win/losses distribution compared to a normally distributed random walk.
It doesn't matter how many times you flip a coin or what the small drift is, the expectation of heads is still 50/50. A trader has some advantages, although small they can be significant. For instance 1.when the bet is made 2. how large the bet is 3. when the exit is made yet we can safely assume the " House " will still be ahead if a number of people play. The lucky and clever ones will probably be up. The unlucky and average Joes down