Is Day Trading something you can Learn or is it just Blind Luck?

...this is absolutely everything that you need to know.

6 minute read

There are literally so many market participants actively trading in the markets that you have to wonder if the traders who eventually become millionaires didn’t simply achieve this on the back of a huge a lucky streak. You would assume that with the amount of trades someone would need to place before they made a million bucks that their luck would run out way before they got anywhere close to making that kind of return. We are going to take a look into this and find out just how much of a lucky devil you really need to be in order to win in the markets.

Is Day Trading Down to Luck
Being ‘fooled by randomness’ can be as common in life as it is in the markets. How do you know that you are not just on a lucky streak, and ultimately, does it really matter so long as you make enough money to be content.

You were probably told from a young age that the more you work hard and learn different skills that the more successful you will be in your life. It’s a romantic and inspiring sentiment, and also nice that parents / teachers etc. want to promote positivity, but it’s also total bullshit. There are numerous examples but let’s start with something relatively straightforward.


Let’s say there are 10 individuals who have all set up their own barber shops in a given city, and that there is only enough custom (and therefore profit potential) in this market for three of those shops to go on and make a success.


Next we need to look at why it was those 3 particular companies who achieved success. Well, the chances are that it wasn’t because the owners of those shops were any smarter or worked any harder than the other 7 shop owners who failed. In fact, it is quite likely that at least a one of the owners out of the 7 who failed was actually harder working and smarter than one of the 3 who found success. After all, most individuals who have the drive and confidence to set up their own business are smart and have an excellent attitude to work.


Such is the luck of life. The 3 successful shops may have a location in town where there is 10 - 15% more natural footfall (not easily observable or analyzed). There may be an external factor such as a local sports team gaining in popularity whose stadium is close to the shop, resulting in increased weekly shop front footfall of 35%. It may also have been that the person owning the shop was popular at school, they know a heck of a lot of people in the city, and all of their friends, and friends of friends come especially to get their hair cut at this particular barber shop.


The point is that success, to some extent comes downs to luck and circumstance, and if you dismiss this without giving it proper thought and logical analysis then you are simply being ignorant. I say to some extent because you do need to be at a platform level which puts you in the opportunity to start your own business in the first place. You need to have enough academic smarts and ambition which means that should success come your way, you are able to harness it. It is once you are at this platform level where the element of luck comes in and plays a role.


When you are trading stocks you are making calculated bets using a system that you hope will outperform the market, and the luck involved could simply be a question of timing. You may have developed a system or a strategy that is easily capable of turning two hundred dollars into a million during a 4 year time period in the markets, the only issue is that you don’t know where that 4 year window of opportunity lies and you would require a certain degree of luck to be using that system at the right time.

"When a lucky streak is mentioned in trading, it doesn’t have to mean that a trader makes a profit on 100/100 trades. They could win 60/100 and still be in enough profit whereby they are able to re-invest and continue compounding their profits until they are a millionaire."

With this in mind, it’s clear to see that going on a lucky streak to the point where someone achieves unprecedented financial success is certainly not something beyond the realms of possibility. It’s also interesting to have a think about just how many people are trading in the markets at a given time and that simply by the law of averages, there have to be a certain amount who just get lucky.


There were a set of lucky circumstances which made the individual who owned the barber shop successful, and there will be a set of lucky circumstances which make a day trader successful. They may have found a set-up that works in the markets during a specific time period (or market cycle) where that specific set-up works, they may have invested in a product which happened to go through massive percentage gains (ie. Bitcoin), or they could have just kept guessing right, partly through intuition, partly through luck; but it worked for a long enough time period whereby they were able to make their fortune.


Whilst luck has a huge emphasis, both in life and in the markets, you do need to place yourself in a position able to take advantage of the luck which comes your way. The person whose barber it was made a choice to start a business, and make sure they had the skills to run the business once it reached lift-off stage. The traders who make it from nothing in the financial markets learn enough information which puts them onto a platform, which then means they stand a shot at being able to make it if lady luck starts rolling their way. What is meant by this is that you can give a person all the luck in the world, but if they haven’t educated themselves to a level where they can set a stop-loss which prevents their account getting destroyed, then it’ll be impossible for them to take advantage of any luck which comes their way.


There is nothing fundamentally wrong with accepting that a degree of luck is required to become hugely successful in the markets, and it will probably have a positive impact on your trading mentality if you come to accept this.


You should make sure you are well prepared and have a solid platform, and this means learning as much information with regards to the markets as possible, especially if that provides you with knowledge which you can then use to build a proper trading strategy. In a profession that is probably the most competitive around, and with huge amounts of financial reward for individuals that can extract it; it’s nice to think, that you genuinely do stand as much chance to make it big as anybody else.


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