Luck vs. Skill

Discussion in 'Chit Chat' started by pak, Dec 23, 2008.

  1. pak


    How many trades and over how long a period of time will answer the question:

    Was it luck or “skill” ????
  2. With time and a dose of humility a person can easily recognize the difference between luck and skill.
  3. I use this formula:

    Skill = sqrt(numberOfTrades) * (averageProfitPerTrade / standardDeviationOfAllTrades)
  4. That's easy.

    If you win, it was skill.

    If you lose, it definitely was luck [bad],
  5. :D
  6. Luck comes & goes...periodic at best.

    Skill?......Well, skill can last a lifetime as long as ego is absent.
  7. It's all skill...unless you make your trades by flipping a coin. If you consistently lose money or blow up, skill is lacking, vice versa. Personally, I think a trader who manages not to wipe himself out with a few trades has much more skill than a trader you makes a few big homeruns but then blows up. PnL is not measure of skill.
  8. I'd rather be lucky than good.
  9. I got extremely lucky during college in a handful of picks and made more money than I had ever seen. I proceeded to loose 80% of it in LEH, WM and FRE among others. So I know that you can get lucky and in a big way. However I don't think you can figure out it is luck while it is happening.

    Now I am clawing my way back. Funny how you learn something and see the exact mistake you made in the past.
  10. Loki


    luck won't let you stay in this business for a long time.
    #10     Dec 23, 2008