How much of trading is luck?
By Dave Mabe
First, an excerpt from a poem:
Luck is not chance-
It’s Toil-
Fortune’s expensive smile
Is earned...
-Emily Dickinson
When you look at any given trade, almost every one of them will have luck involved.
Did you get stopped out by one tick?
Seems like bad luck.
Did you almost get stopped out, and then by the end of the day the trade was profitable?
Seems like good luck.
But when you start zooming out by looking at a backtest and the equity curve, you realize any effect of luck fades away the more trades there are.
Confidence comes with that ability to zoom out. (Where else would it come from?)
Now imagine you're trying to trade only with discretion.
How long will it take to create enough history to zoom out?
Which path do you think offers a quicker path to the confidence to trade with bigger size?
-Dave
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