Are trading results based on luck? This is asked now and again.
Another way to look at the question is the comparison with betting on a horse. We can relate to this as most of us have had a day at the races at some time or other. When we bet we probably fall into three groups:
(1) We choose which horse based on the jacket colour of the horse or jockey, or we like the name of the horse, or it features in the race with our lucky number.
(2) We choose based on the form we read online or in the newspaper, we follow the herd.
(3) We are a professional, we track the methods and results of many trainers and have done so for several years. We’ve databased the form of all the horses running since day one. From this detail we have a 65% to 75% success rate.
Even with the last example, to have an isolated win is, well, lucky. But out of, say, one hundred bets and winning more than 64 of them has very little to do with luck.
Next week I will talk about what I’ve found to be the secret to being a profitable price action trader, and no it ain’t luck.