Trading is no different as it is also a skill. And like any skill, if you work on it the right way for the right amount of time, you’ll get better at it. And once you get better instead of waiting to get lucky, you’ll be able to create your own, on a consistent basis.
I may be dating myself, but do you guys remember those “pick your own adventure books?” You know the ones where you have to make a decision on what path to follow and based on that decision you had to turn to a certain page in order to see what happened next. Well, I believe that life is the same way and there are key moments that we all face. Moments where we are asked to make a decision that will drastically change our paths going forward. One of those key moments comes in the form of how we decide to handle getting lucky. Although I’m a believer in if you consistently do the right things will put you in a better position to become “lucky” I completely understand that dumb luck happens & that’s usually out of our control. What we can control however is how we react to that dumb luck moving forward.
I’ve been teaching traders to successfully navigate the financial markets since 2012 and in that time I’ve seen the full spectrum of aspiring traders. Meaning those who are committed to doing everything possible to earn success and those who treat it like a get rich quick scheme. As a trader, no matter what side of the spectrum you’re on there was probably a point in time when you experienced some good luck. A good example would be being on the right side of the market as a big fundamental announcement is made in your favor and you profit because of it. When something like this occurs a trader will typically react in one of two ways.
1 — A False Sense of Reality
Often traders will confuse luck for skill. I personally differentiate the two by saying that skill is consistent and can be replicated, while luck can not. BUT most struggling traders will refuse to accept that because it’s much easier to tell yourself what you WANT to hear instead of what you NEED to hear. So what typically happens is that the big win inflates the trader’s ego, causing them to think that they are better than they actually are. This leads them to take more risk on future opportunities because of the expectation that they can duplicate their previous results & capitalize on it even more (because they are soooo good). The unfortunate reality is that — bigger risk + trading off of randomness = a blown account. It may not happen right away, but trust me it ALWAYS ends this way.
2 — A Positive Reality Check
If a trader is honest with themselves they will accept the fact that the market gods were on their side and they simply got lucky. With that being said, the profits and the feeling that you got from making them are still very real. Traders that I have seen go on to become consistently profitable tend to look at a lucky situation as a sign of what could be. What I mean by this is that they know that this type of luck is most likely a rare and random occurrence but they also understand that if they go about things the right way then they can turn that rare occurrence into a consistent one allowing them to consistently replicate the profits made and the feeling from making them.
Time to Sports Nerd
Last year in the NBA playoffs, Portland Trailblazers point guard Damian Lillard hit (what looked to be) a magical shot to send his team to the next round of the playoffs. He shot the basketball from 37 feet out (basically half-court) as time ran out on the clock and afterward some referred to it as a “lucky” or “bad shot.” Here’s how Lillard's responded:
I think a lot of people don’t know what goes into the moments. That’s because they’re not the ones that’s there. I literally work on those shots. And I don’t work on it so I can just come out and just shoot it for the whole game. I work on it just because, over my career, I know how much attention I’m going to get from defenses. So it’s just like you’re just keeping stuff, adding more things, adding more and more, keeping stuff in your pocket, in case these types of situations do present itself. Even if it’s not something you want to lean on, it’s something that you have there, that you worked on, you spent time doing. So, you’ve got confidence in it when the time does come. That’s why, when I was just standing there, I was like, well, it’s probably not good in a lot of people’s eyes. But I’m comfortable with this, and I’m confident in this. So, to me, it’s a solid shot.
As you can see, this shot wasn't lucky, rather something that was worked on. And these days in the NBA half-court shots, which used to be all luck, are being practiced by many of the top players in our league including LeBron James, Steph Curry & Damian Lillard to name a few.
Trading is no different as it is also a skill. And like any skill if you work on it the right way for the right amount of time, you’ll get better at it. And once you get better instead of waiting to get lucky, you’ll be able to create your own on a consistent basis.
For more on this topic, here’s an interview with a trader I work with explaining how a LUCKY trade opened his eyes to what was possible from trading and how it encouraged & motivated him to turn his luck, into a skill.
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