Trading Success: Skill vs Luck – What Really Determines Your Profits?

Hello everyone.

What do you need to make a stable profit on Forex?

Surely, on certain unlucky days, you have thought that you are simply unlucky. That you are a loser. And that only people "born under a lucky star" achieve success. Is there any truth in this statement? After all, you have probably heard of the "law of attraction" from the film "The Secret". Let us sort it out.

On various websites and VK public pages you can find a lot of materials on topics like "How to attract wealth into your life", "Change your thinking and you will change your life!", "Voodoo magic will bring success!" and so on.

So, do these things work in Forex? Will positive visualization help you come to success?

Yes and no.

First, why not. Understand this: if you mentally visualize a positive outcome for a trade, the market will not change its direction. And your strategy will not start working better. And amulets charged by sorcerers will not increase the size of your deposit. I checked))

And why yes? Positive thinking can help you keep moving in the right direction for a long time. When a typical whiner gives up, you continue looking for what works and, most likely, find it. For example, you fundamentally believe that you will achieve success in trading, you keep moving toward this goal, studying something, trying things, reading books, articles, and so on. How can the law of attraction work in this case? You may come across a strategy that suits you specifically, you may meet some people with similar interests who help you in some way. Or something may happen that you did not anticipate at all. For example, an old acquaintance of mine was passionate about trading, and now he has a small company developing IT solutions for brokerage firms.

That is, do not even think about applying the law of attraction directly in the trading process itself. It will not lead to anything good. But over the long haul, positive thinking will help you achieve success. I, for example, still arrange money in my wallet according to feng shui and mentally say "thank you" when money comes into my account.

Despite all the talk about luck, we must ask: How do you calculate skill and luck? What would you base your evaluation on in order to assess them properly? The answer to these questions is quite simple in a card game such as blackjack, where the odds are a fixed quantity and known in advance. With them, you can assess the situation and make a very good estimate of your chances compared with the probability of receiving them. If the "house" gives better betting odds than the implied probabilities, then it is a good bet and you should make it. For example, if you have a ten percent chance of winning but the betting odds are 20:1, then it is a worthwhile bet.

However, let us look deeper at the statistics. This bet will be lucky and win a large amount of money about one time out of every ten, compensating for your risk. If you made it 10,000 times, you would come out the absolute winner, having made a huge profit. But on any particular bet, absolutely anything could happen. You could probably lose 15 times in a row, and that would not be anything unusual.

How do you determine these probabilities in your own trading? You should keep such records and/or study the history of your trades comprehensively in order to know your own chances and probabilities. Do you have certain criteria for opening a position: which setups work and how often? How much do you earn and how much do you lose? Which criteria for closing a position work best and when? Having such a huge mass of information, you should be able to work out some of the most important statistical data: which approach works, how much profit it brings, when it works, and how often it works.

The point of collecting this data should reflect information about your trading. If you have all the accumulated data, you can begin to draw conclusions about your overall results. Perhaps you remember some specific position that worked out well, but as soon as you see all the data, you may conclude that overall this strategy does not actually work well.

Probabilities and statistics become meaningful over long periods of time and with large volumes of data. Thus, you need large sample sizes and plenty of data to figure out what works. The more data and time you have, the more you can neglect the role of luck and attribute the results exclusively to your skills.

To analyze your trading, you can use auxiliary services, for example MyfxBook and MarketStat.

Take, for example, an investment fund manager who puts a disproportionately large share of his fund into a single position and earns a stunning profit over the course of one year. Perhaps this is due to luck, because he made a reckless bet that just happened to work out. Or perhaps it is a sign of his skill, since his methodology suggested that the price was ready to rise and he acted prudently by placing a large bet on it. It is hard to say unequivocally whether this manager truly has sufficient expertise based on only one year, because that is too small a sample size.

Most often, people become victims of "one lucky trade", where they make a decision based on the most recent result regardless of the fact that the underlying parameters were still developing. The fund manager is probably a terrible manager and, in terms of investing, simply "bet everything on black."

But his large bet brought him good profit in the short run, and as a result people started flattering him and calling him a genius.

To determine unambiguously whether he really is a genius, you need to look at the execution of his positions over the course of a decade, assess his performance overall, and measure his gains relative to a benchmark.

Both the frequency and the magnitude of his outperformance should be assessed. This type of stable and consistent outperformance would demonstrate a strong process capable of identifying extreme zones in a stock and opening large positions there. If the manager was simply lucky, then you will see a couple of notably good years, but the overall trend will not be satisfactory, and he will not show any clear advantage in trading the markets.

And heaven forbid you think, "I will get lucky. I will break the rules / MM / widen the stop-loss just once..." and do something foolish in trading in the hope of luck. And the scariest thing is if you really do get lucky. Why? Because you will decide that if you got lucky once, you will get lucky again. But in fact, your luck will run out much sooner than you think.

Sincerely, Pavel Vlasov
TradeLikeaPro.ru

Tochka sbora etikh dannykh dolzhna otrazhat informatsiyu o vashey torgovle. Esli u vas imeyutsya vse nakoplennye dannye, vy mozhete nachat delat vyvody o vashikh sovokupnykh rezultatakh. Vozmozhno, vy pomnite kakuyu-to konkretnuyu pozitsiyu, kotoraya khorosho sebya otrabotala, no, kak tolko vy uvidite vse dannye, vy mozhete sdelat vyvod, chto v tselom eta strategiya na samom dele ne rabotayut khorosho.

Veroyatnosti i statistika stanovyatsya znachimymi pri nalichii dlitelnykh periodov vremeni i bolshikh obemov dannykh. Takim obrazom, vam nuzhny bolshie razmery vyborki i mnozhestvo dannykh, chtoby vyyasnit, chto iz nikh rabotaet. Chem bolshe dannykh i vremeni, tem bolshe vy mozhete prenebregat rolyu vezeniya i svyazyvat rezultaty isklyuchitelno so svoimi navykami.

Dlya analiza svoey torgovli mozhno ispolzovat vspomogatelnye servisy, naprimer MyfxBook i MarketStat.

Vozmem, k primeru, menedzhera investitsionnogo fonda , kotoryy stavit nesorazmerno bolshuyu dolyu svoego fonda v odnu pozitsiyu i v techenie odnogo goda poluchaet potryasayushchuyu pribyl. Vozmozhno, eto svyazano s vezeniem, potomu chto on sdelal bespechnuyu stavku, kotoraya tolko chto otrabotala sebya. Ili zhe, vozmozhno, eto pokazatel ego masterstva, poskolku ego metodologiya predpolozhila, chto tsena  byla gotova vyrasti, i on postupil predusmotritelno, sdelav na nee krupnuyu stavku. Tyazhelo odnoznachno skazat, deystvitelno li dannyy menedzher imeet dostatochnyy opyt, osnovyvayas tolko na odnom gode, ibo eto slishkom malenkiy razmer vyborki.

Chashche vsego, lyudi stanovyatsya zhertvami «odnoy udachnoy sdelki», gde oni prinimayut reshenie, osnovyvayas na samykh poslednikh rezultatakh, nezavisimo ot togo chto iskhodnye parametry nakhodilis v protsesse razvitiya. Menedzher fonda, veroyatno, uzhasnyy menedzher i v plane investirovaniya «sdelal vse stavki na chernoe»

No ego krupnaya stavka v kratkosrochnoy perspektive prinesla emu khoroshuyu pribyl, v rezultate chego lyudi stali lstit emu i nazyvayut ego geniem.

Chtoby opredelit odnoznachno, yavlyaetsya li on na samom dele geniem, nado prosmotret na ispolneniya ego pozitsiy v techenie desyatiletiya, otsenit ego proizvoditelnost v tselom i ego prirost po otnosheniyu k kriteriyu sravneniya.

Sleduet otsenit kak chastotu, tak i velichinu ego sverkhproizvoditelnosti. Etot vid ustoychivoy i posledovatelnoy sverkhproizvoditelnosti prodemonstriroval by silnyy protsess, kotoryy v sostoyanii opredelit ekstremalnye zony aktsii i otkryvat v nikh pozitsii krupnogo razmera. Esli menedzheru povezlo, to vy uvidite paru pokazatelnykh khoroshikh let, odnako obshchaya tendentsiya ne budet udovletvoritelnoy, i on ne pokazhet naglyadnogo preimushchestva v torgovle na rynkakh.

Chto vy delaete vo vremya dlitelnykh periodov otsutstviya rezultatov torgovli, kak vy otsenivaete sebya ili drugogo menedzhera? Est khoroshiy sovet - tshchatelno zapisyvat na bumage vse faktory masterstva po sravneniyu s udachey. «Tam, gde prisutstvuet vezenie, sleduet sosredotochivatsya na protsesse». Esli prisutstvuet vezenie, to vy ne mozhete ego kontrolirovat i lyuboy konkretnyy rezultat budet neskolko sluchaynym. Vmesto etogo maksimalno sosredotochtes na ponimanii i uluchshenii protsessa. Vot pochemu my schitaem, chto torgovlya – eto vse, chto svyazano s prinyatiem resheniy i chto nuzhno sosredotochitsya na tom, chtoby prinimat naibolee vozmozhno luchshie resheniya v plane sootnosheniya riska k pribyli. Ubedites v nadezhnosti vashego protsessa; ubedites, chto u nego imeetsya tverdaya osnova, obespechivayushchaya ego rabotu; ubedites na svoikh sobstvennykh rezultatakh ili na analize istorii, chto on rabotaet, i opredelite statisticheskie preimushchestva, kotorye on proizvodit.

V konechnom schete, stremites svodit k minimumu rol udachi, prodolzhaya narabatyvat svoi navyki prinyatiya resheniy. Est neskolko sposobov, pri pomoshchi kotorykh vy mozhete usilit sushchestvuyushchiy protsess torgovli:

I upasi vas Bog, podumat "Da mne povezet. Vsego razochek narushu pravila / MM/ uvelichu stop-loss...." i sdelat kakuyu-to glupost v torgovle v nadezhde na udachu. I samoe strashnoe, esli vam deystvitelno povezet. Pochemu? Potomu chto vy reshite, chto raz odnazhdy povezlo, povezet i snova. No na samom dele vashe vezenie konchitsya gorazdo ranshe, chem vy dumaete.

S uvazheniem, Vlasov Pavel
TradeLikeaPro.ru