Skill is what you have when things go right.
Luck is what you don't have when things go wrong.
Probability does not have a personality.
"Luck is probability taken personally.” – Penn Jillette, attributing its origin to Chip Denman (an IT director, University of Maryland & former NIH statistician). from Annie Duke twitter
Skill versus luck. Over confidence versus luck. Hot hands versus luck. Probabilities versus luck. There are many combinations of what probabilistic success means, but the one thing that a trader should never have or depend upon is luck. He has the odds or he does not. You will win more than you lose if your odds are favorable; assuming you handicap properly and you size the risks properly.
Skill is about handicapping probabilities correctly and then knowing how to size bets properly. If you handicap a high (low) chance of success, bets will be larger (smaller). Handicapping and sizing go hand in hand.
If you are more successful than anticipated, you likely undersized your positions. If you are less successful at prediction, then you likely oversized your positions. There is no luck. There is just knowing your abilities to handicaps and place appropriate wagers. There is no good luck or bad luck, there is only misjudging of probabilities and misweighing bets. If there such a thing as luck, good or bad, it is associated with the error with your guesses. The mistakes either work or don't work and that is the measure of "luck".
If you are more successful than anticipated, you likely undersized your positions. If you are less successful at prediction, then you likely oversized your positions. There is no luck. There is just knowing your abilities to handicaps and place appropriate wagers. There is no good luck or bad luck, there is only misjudging of probabilities and misweighing bets. If there such a thing as luck, good or bad, it is associated with the error with your guesses. The mistakes either work or don't work and that is the measure of "luck".
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