It's your Lucky Day! .............. or is it?

The way things turn out in your life is influenced by both skill and luck. Skill is the thing you can control and luck is the circumstance outside of your control.  However we often confuse the two or are unsure about which one is which. 

This is especially true in Trading.  Most humans are calibrated to be positive and optimistic, this is a good thing. It's why we’ve evolved and survived for so many years as a species.  But this can lead to a major blind spot in that we are overly confident in the effects of our own decisions.

You may be familiar with these scenarios:

• You take a trade and it’s successful.  You look at it again on the screen, you’re happy with your work and you think that it was your skill that enabled you to make money. Any anxiety and doubt that you had when running the trade are long gone.  The good stuff was all down to you!  Hey, you may even go back and look at the trade a couple of times more, nothing wrong with stroking the ego eh! 

• You take a trade and it’s unsuccessful. You look at it again on the screen, the problem wasn’t you, it was the market. The set up was great, your entry was perfect but the market turned against you! Well that’s just bad luck, you can’t do anything about it. You eliminate this trade from your mind and never think about it again.

This is an all too common situation with Traders.  We often think the good outcomes are down to us and our great skills and the bad outcomes were just due to bad luck.

But if you can’t be honest with yourself and determine which results are due to skill and which are due to luck then you can’t improve your results.  Only by focusing on improving the skill related elements can you achieve greater consistency and profitability.  If you improve your skills your chances of success are better.  Like the great golfer Gary Player said “The more I practice the luckier I get”.

Nobody can predict the markets 100%, so there is always going to be an element of luck involved.  But how is it that Hedge funds and banks make large positive returns year after year trading and yet 90% of us retail traders lose money.  Well the answer is that their skill is in playing the probability game.  And they have perfected that skill over many years and invested hundreds of millions of dollars in people and on powerful systems to give them an edge.

If you’ve read our e-book on High Probability Trading you’ll know we think about skill and luck a lot.  Our goal is to ensure Inteligex can identify trades with the highest chance of success and to ensure these are profitable by accurately predicting stop and target settings.  And with an over 80% win rate we know we are doing a good job. 

The Inteligex system is a foundation for daytrading and by learning to use the system you are increasing your trading skill.  It's an investment in you! The more you understand it, the more types of trade you can take.  What’s more it keeps you really honest.  If you follow the process and the trade goes against you then it was bad luck, everything else is down to your skill in using the system!

If you want to read up further on skill vs luck, I thoroughly recommend a great book by famous poker player Annie Duke called Thinking in Bets.  Here's a nice video summary of less than 10 mins for those time pressed amongst you.