Skill vs. luck in Forex trading

[Dave86]

I have been discussing with my fellow traders on whether Forex trading done by individuals like us is like playing chess (skill) vs. playing slots (luck).

What is your take on this? Where would you put Forex trading a scale from 1 (slots) to 10 (chess)? Why?

 

[Atilla]

I have been discussing with my fellow traders on whether Forex trading done by individuals like us is like playing chess (skill) vs. playing slots (luck).

What is your take on this? Where would you put Forex trading a scale from 1 (slots) to 10 (chess)? Why?

10 for me.

The number depends on ones approach. 10 - If it is a calculated move with reasons and considerations that determine ones decision in direction coupled with targets and exits.

Horses for courses

 

[brewski1984]

10 without a doubt.

Luck will never last long enough to conquer skill.

 

[IzaIza]

You ain't living if you ain't gamblin'.

haha, its about 70 skill/30 luck in my opinion. You can make a good move, but you dont control the market. You will lose if you try to outplay the market.

 

[Atilla]

You ain't living if you ain't gamblin'.

haha, its about 70 skill/30 luck in my opinion. You can make a good move, but you dont control the market. You will lose if you try to outplay the market.

To call it luck lacks appreciation and comprehension of random events.

If you put some effort into looking into what you describe as luck you'll see it is more a case of uncertain events with various chance of probabilities.

The Drunkard's Walk by Leonard Mlodinow is a good read

 

[louistrader]

The actual results in Forex, for the retail public, are all luck based. The skill involved is proper risk management so that you can survive long enough to get lucky.

 

[Atilla]

The actual results in Forex, for the retail public, are all luck based. The skill involved is proper risk management so that you can survive long enough to get lucky.

Do you get lucky or does lucky get you?

 

[louistrader]

Do you get lucky or does lucky get you?

I will quote part of your signature as my answer. "Life is 10% what happens to you and 90% how you react to it."

Everyone is viewing the markets through a similar lense and the market is a constant for all of us. Everyone is using some version of Random Walk, planetary cycles, technical analysis, technical indicators, news, etc. The key is how you react to a position going in your favor and how you react when a position goes out of your favor.

What "luck" is can be argued. For mathematically minded individuals, luck is chance. The better your risk management, the more chances you have so you are ultimately finding luck yourself by giving yourself a higher number of chances.

 

[Atilla]

I will quote part of your signature as my answer. "Life is 10% what happens to you and 90% how you react to it."

Everyone is viewing the markets through a similar lense and the market is a constant for all of us. Everyone is using some version of Random Walk, planetary cycles, technical analysis, technical indicators, news, etc. The key is how you react to a position going in your favor and how you react when a position goes out of your favor.

What "luck" is can be argued. For mathematically minded individuals, luck is chance. The better your risk management, the more chances you have so you are ultimately finding luck yourself by giving yourself a higher number of chances.

Disagree strongly!

Everyone views the markets through different perspective based on past experience and their personal interpretation and the market is never a constant but change is the only constant.

Big difference in various systems. Even if you provide the same information with same system, to same group of people - they (different people) will take different bets.

 

[barjon]

What's the war cry on the trading floors - "I'd rather be lucky than good". Mmm, I'll go along with that

 

[Jack o'Clubs]

What's the war cry on the trading floors - "I'd rather be lucky than good". Mmm, I'll go along with that

I've been in a couple of instances recently where I've been asked to explain whether results have been luck or skill. My preferred flippant answer is Gary Player's 'hell, the more I practice, the luckier I get'

 

[MajorMagnuM]

currently practicing these moves

 

[IzaIza]

To call it luck lacks appreciation and comprehension of random events.

If you put some effort into looking into what you describe as luck you'll see it is more a case of uncertain events with various chance of probabilities.

The Drunkard's Walk by Leonard Mlodinow is a good read

Please elaborate.

I hope it is more than just monitoring the economic calendar, watching bloomberg or receiving Reuters feeds.

 

[MistakesWereMade]

This is why I was hesitant to put money in forex... I just don't know what to look at to give you a better advantage, it's all like blackjack to me..

Don't know how to follow the news since it's a whole country & besides brokers will flag you if they find out...

I don't like putting my money in things unless I'm pretty certain of a profit...

 

[kwickwool]

Was just about to state the harder i work the luckier i get by gary player and was beaten to it by Jack o clubs there.

This is the game of the gods, you either have what it takes to survive or you dont and you will get chewed up and spat out, its that simple. Of course luck plays a part to a certain degree but for longevity and stability luck will even out and you are either successful by skill or you are not and you will fall.

Every dynamic and perspective of trading needs to be understood with a continuous improvement mentality that makes sure that you as a trader can continually adapt and evolve regardless of how the market is behaving.

One of the hardest ways to make the easiest of livings, cant take credit for that phrase as heard it here a while ago but sums this game up perfectly.

and was going to finish with a good luck all........but will finish with a "hope you have what it takes" instead as more in line with this thread

Kwickwool

 

[Atilla]

Please elaborate.

I hope it is more than just monitoring the economic calendar, watching bloomberg or receiving Reuters feeds.

That's a good start but there are few more checks to tick off.

1. News- need to definitely keep abreast of the news and what happens overnight in the Asian sessions. Key ones being jpy, aud, oil, gold, silver. Compare moves between major pairs. Not just read this stuff but try and appreciate what it means to your currency pair.

2. Technical charts - if you look at the technical charts starting from long time frames - monthly and then drill down into smaller time frames you will see and feel for the movement and note strong S/R levels.

I think Fib retracement on longer time frames are significant levels and coupled with pivot points should provide a good indication for placing targets and stops.

You should also view the Trading Range of the last 'x' time frames that you use for holding your trades and be aware of the volatility of your currency and it's price range.

Here is a really good site imo on FX correlation. https://www.mataf.net/en/tools/01-01-correlation

Compare the currency index and you can observe changes between the pairs based on correlation and historic movement make an informed decision on diversion.

Here is another http://www.investing.com/ .

3. Fundamentals - there is the news and applied economics - knowing the effect of news eg: difference between real and nominal interest rates, inflation, BoP etc., should help digest what's going on in the markets and currency flows.

There is shed loads of work to do here and material to go through but each to their own. I'm not saying this is all of it but what I learnt as being relevant in my approach to forming decision on direction.


Being an economist graduate I thought I knew it all and it cost me quite a sum of money learning I didn't.

I've learnt more from numerous people providing free opinions on this site then I did at uni and now in the process of clawing back slowly what I lost rapidly.

The more work and effort one puts in then the more one will understand the instruments and tools one uses in deciphering the moves. In fact it is more important to understand and fathom out why the market has moved against you then for you.

To call it gambling / luck is an indication one is not taking this business of investing seriously. imo - It's lazy speel for I don't know what I'm doing.


I like the humbling way put by others; harder I work the luckier I get.

I wonder which part of that statement lingers on the mind of the reader?

- He worked hard
- He got lucky

:?:

 

[IzaIza]

Well explained Atilla. Credit is well deserved.

To each their own, I suppose.

There is many ways to trade, I hope you have found one that suits you.

 

[IzaIza]

This is why I was hesitant to put money in forex... I just don't know what to look at to give you a better advantage, it's all like blackjack to me..

Don't know how to follow the news since it's a whole country & besides brokers will flag you if they find out...

I don't like putting my money in things unless I'm pretty certain of a profit...

That is an excellent plan, do not invest unless you are certain.

I would just like to iterate that there are many traders that are quite successful without following the news whole. There are economic calendars you can keep track of as well as indicators or alarms that will alert you prior to figure release.

Perhaps you should look into technical analysis, it is somewhat similar to playing a blackjack hand "by the book". (Your own book.)

I have an indicator that alerts when anything is coming up on the economic calendar. I monitor my trades closely to confirm my suspicions are correct.

May the luck be with you

 

[MistakesWereMade]

That is an excellent plan, do not invest unless you are certain.

I would just like to iterate that there are many traders that are quite successful without following the news whole. There are economic calendars you can keep track of as well as indicators or alarms that will alert you prior to figure release.

Perhaps you should look into technical analysis, it is somewhat similar to playing a blackjack hand "by the book". (Your own book.)

I have an indicator that alerts when anything is coming up on the economic calendar. I monitor my trades closely to confirm my suspicions are correct.

May the luck be with you

I've studied technical analysis but mostly for the stock market.. It's works a little different in the forex I believe.. I don't have the enthusiasm really to play the forex.. I just don't like how numbers move so slow (regardless of leverage) and it's not as dynamic as the stock market.

 

[Charles Bronson]

The more I rely on luck, the less I seem to have it.