Because one can point to traders who (up to this point) have a winning track record -- or died before they went broke --- does nothing to change the fact that trading is absolutely gambling.
There are lottery winners everyday -- but any fool knows that you can't play the lottery profitably from a mathematical standpoint.
Many people return home from Las Vegas winners -- but it doesn't mean they have necessarilly done so by playing an edge.
Many people have died in commercial airliner crashes -- but do you really think you can intentionally pick-out a flight that will crash in the future? But there are dead people to prove that dying this way can be done, right?
'Backtesting' pseudo-patterns and strategies on (financial instrument) charts is a very alluring, I will admit. But unfortunately, it's a trap.
Probably your best chance in this business is to hope and attempt to get lucky -- and make a big hit -- with very low risk. And then (for God's sake) -- don't go back to the well by putting any significant portion of your winnings at risk.
If you must continue, by all means follow the same strategy again. This way, you have the opportunity to either get lucky again --- or not live/trade long enough to go broke.
I would tend to agree trading is still very much gambling. Maybe investing not as much so, but it seems so rigged and manipulated by those inside or on top these days i.e. the wealthiest investors and institutions.
You've got much better odds as a trader than on the slots depending on your edge and performance. But then again the game can be changed. Like those guys who walk around on the slots floor with those two-way radios or whatever and report on the winnings. Then next thing you know that whole section of the slots got that much harder odds. Similar thing with the market behavior not being easier for a certain trader's method and edge.
And as retailers we're not big enough to influence the market like the big players in a poker-like way. I knew a couple of guys who counted cards and played that edge to always win when visiting Vegas before they got caught and booted out by observing security and told they were not welcome anymore in that particular casino. They told me the edge was better at like 51%
so I guess trading is similar in that regard , one can exploit the edge and keep doing it until the game changes or other factors change things such as HFT, illiquidity/false volume, & front-running by everyone else who know what setups you have, etc.
Probably better to have a secondary or alternate career in the long haul. But then there are also some(few?) professional gamblers who do it for a career.
You are right, slots are horrible. However, minimum slot payouts are set by the state not the casino and is law. For example Washington State is generally 75% payout which is horrible. Some others are 85%. I've read casinos won't even open if the State sets their minimum payout ratio higher than 90%+. The problem now is the States need the revenue so they are agreeing to lower and lower minimum payout ratios.
The trader has the same thing to deal with slippage and commissions. People scalping 10 ticks or less on some instruments can have similar odds to the slots....
Yes, but you have to understand that the fact that you can point to successful traders is not an indication that it is a feasible pursuit.
If enough people attempt something --- there will always be some who appear to be successful --- simply by the virtue of the process of random of elimination.
In other words -- there will one day be a "last living person on earth". Preceeded by a last 10, 100, 10,000 1,000,000 people. And so forth. It can't come down any other way.
Let's look at it in a different way.
How many people live to be 100+ years old? Do you believe these people (who have done so) have accomplished the feat because they are skilled? Should you study their lifetstyles and buy their books on longevity?
Or --- are they nothing more than a product of probability? Do you actually believe that just because they lived to be 100+ -- that you have a any reasonable shot at accomplishing this feat?
I sure hope not !!
If 90% - 95% of all persons who attempt something fail (trading) --- my money says the ones who are left standing/squawking/writing books --- are much more likely to have been lucky --- than skilled.
Just so you'll know. I'm not a troll. I'm attempting to get lucky at trading. But I'm not kidding myself about what I am doing.
I passionately disagree. The example you gave is flawed, as getting old requires, if any, very little skill. Contrary to trading.
People don't simply get lucky at skill based activities. You could drag as many people to a golf course as you want, none of them will beat a top professional (the 5%) just because he is lucky.
Or take NASCAR or F-1, a mere mortal will get himself killed very quickly in such a race, or if he is lucky enough to survive, he will certainly not beat the others, lucky or not.
Without the proper skill set they are doomed. Luck of curse plays its part, but don't be fooled to overestimate it. If you want to get lucky in trading, better carry your trading account to a casino, that should be much more fun. And the odds are much better if you want to rely on your luck instead of skill.
Ok, well I like to compare traders to businesses. Why? Because they are. As you probably know 80% of businesses fail in the first two years and 90% of restaurants so not much different to traders. The question is are those business owners who survived lucky?
Over the years I've advised many businesses large and small. If I look at the successful businesses luck played a very small part. Generally, they had a better product or service, were better capitalized, more effectively managed their costs, understood customer wants and needs and many other things they did better than the failed businesses.
Same in trading. You have to do everything better than the next guy. Not just in one area but in all areas otherwise you will end up in the 90% losing basket.
Luck runs out and quickly so I think it's very hard to survive in this game on luck alone.....
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Any time the outcome of an event or endevour is not assured -- it constitutes a potential gambling experience.
There is virtually no activity that humans participate in that doesn't carry some type of risk/reward consideration.
Any business endeavour for sure, is gambling.
Sorry, but, no -- I don't anymore consider a person who wins 5 Blackjack hands in a row to necessarily be any more skillful than than a business owner who makes 5 key business decisions -- which prove to keep his business prosperous for 5 straight decades.
What appears (in retrospect) to be skill --- has only been the product of enough people attempting something and some inevitably hitting a winning streak.
Would not most have considered JC Penney and K Mart to have been built on skill and vision back in 1975 --- considering their long history and track record of success? How about those who bulit vast newspaper empires? Or even little Hostess snacks?
The list could go on forever of businesses with successful track records for decision-making (perceived skill) -- that
eventually ran out of "luck" --- and went broke.
If you've been fortunate enough to have been lucky -- you'd better not make the fatal mistake of believing that you've done so skillfully.
But I know you will anyway -- so I'll shut-up now and get first in line to remind myself of what I just said when I go broke trying this stuff
I never said that luck has no share. But I think it would be foolish to overestimate that share.
People don't build empires on luck. People build empires on skill and they have to have some luck too. They don't only have to have the right ideas, they have to have them at the right time, and there is a certain element of luck to that.
Skill however is the foundation for success, not luck. But even this skill is not a guaranty for being successful, and a bit of luck in the right situation can go a long way.
Tell me, do you believe Air Jordan, Leonard Bernstein, Eric Clapton, Juan Manuel Fangio or Tiger Woods became successful just because they were incredibly lucky?
I think that their success is skill based, but there also is an element of luck, yes.
This luck however can never make up for a lack of skill!
This is a very interesting debate and I do understand and respect your points very much.
If I told you that the SPX is up an average of 0.50 % on 75% of the days after --- it's rained in Kenosha, the Orioles scored mores than 5 runs the previous night and the #1 song on the Jazz chart is by an artist that has an "E" in their first name --- would you consider this sound logic to put money at risk?
Probably not and neither would I - but I tend to consider past price patterns to be pretty much the same.
To win at this (trading), in my opinion, you have to *guess* correctly on the future -- which I'd imagine most anyone would consider to be speculative pursuit at best. And to ultimately be very succsesful, you'd have to guess correctly over and over again -- which is why I say that if you are lucky enough to be correct BIG -- don't risk much in the future because I don't believe the future is consistently predictable. Many (if not everyone) who has ever lived has attempted this and the consensus seems to be that is is an impossible task to pull-off with any measure of consistency.
It's easy look a a chart and come to the conclusion -- "Hey, just cut your losses short and let your winners run" and this game is a piece of cake! But as we all know, the ones that you should cut short and let run are only visible in the rear-view mirror.
One more thought as it relates to gambling. Most of the greatest gamblers the world has ever known have gone broke many times in their careers. The more straight-laced academic types who are attracted to trading can't seem to grasp this. They want to believe that they can consistently *earn* money much like those who work for a living. They want to be family people who fit seamlessly into their communities -- as opposed to pariah's who will not hesitate to bet 1/2 their bankroll on which raindrop will roll down a car window first. They don't relate to this mentallty.
Scared "little-girl" tactics like scaling-out, daily profit/ loss limits -- need not apply -- if you want to be great.
I'd wager that I could take 2-3 top-notch (true) gamblers -- who had never been exposed to financial markets-- and they would wipe the floor with most traders within only a day or two.
But they wouldn't be able to hang onto it -- for the very same reasons they were able to make it in the first place. But they would make it and lose it again 100 times over --- before you and I ever made it once.
Everything coming together perfectly for a person only happens in Disney movies -- starring MJ