Good morning, traders…
Think about what a “game” is (by definition):
A competitive situation, with rules, stakes, winners, and losers.
That’s trading to a tee.
Once you see it through that lens, you can improve your moves by simply learning the rules of the game.
But there’s a twist…
In any game, two factors determine the outcome: skill and luck.
And while it’s easy to chalk up wins to your brilliant skills (and losses to bad luck) … that’s not how it works.
Sometimes, you’ll simply get lucky. Other times, you’ll do everything right and still take a loss because something completely out of your control blindsides you.
Over the long term, skilled traders come out on top.
But in the short term, there’s not always a direct correlation between how well you trade and how much money you make.
It’s a tough thing to accept, but a necessary one if you’re serious about becoming the best trader you can be.
Don’t underestimate the hidden role of luck in the stock market…
The Fine Line Between Skill and Luck
Being a master options trader is about understanding the market, studying the data, choosing the right contract, timing your entry, and knowing how to manage risk.
But luck is the wild card, the stuff you can’t plan for.
Because markets are always influenced by factors we can’t control: news events, political tensions, weather, you name it.
Let’s say you’ve done your homework on the fruit market.
Based on your research, you’re confident that apple prices are about to go up.
So you buy a call option.
But then, out of nowhere, news breaks: a newly-released fertilizer just increased apple yields tenfold.
The market floods with supply, demand falls, and apple prices tank.
Your call gets crushed.
Was your research bad? No. Did you do anything wrong? Nope.
You simply got blindsided by an event you couldn’t have seen coming.
That’s luck. Or rather, bad luck.
Every trader who sticks around long enough runs into this. It’s a feature, not a bug.
But don’t confuse this with gambling. Trading is less like roulette and more like poker.
In poker, skill dominates over time, but chance still plays a role.
The best poker players still lose individual tournaments, but they win in the long-term.
The same goes for traders.
But what most don’t realize is this:
You can set yourself up to get lucky more often than not.
How to Set Yourself Up for Luck
Focus on the Price Action
First, check my OMEN Scanner. See what names are getting big bets.
Then connect those bets to bullish chart patterns.
Price and volume are your best tools.
See what the market is actually showing you, not what you want it to show you.
If a stock is making lower highs and lower lows, that’s bearish, no matter how much you want it to go up.
Stick to what the chart is showing you, not what your gut is telling you.
Read Global News Every Day
It sounds simple, but staying informed gives you a better shot at being in the right trade at the right time.
If you don’t follow the news, you might be shocked by a headline ruining your position.
Watch for Macroeconomic Hints
Big reports (inflation, jobs, GDP) often cause major moves.
That’s why I’m always tracking Fed meetings, Bureau of Labor Statistics data, all of it.
A stat that blows my mind: “Since 1961, the 44 days a year where there has been major economic news account for over 71% of aggregate equity market returns.”
That’s about 17% of all trading days contributing to the majority of market gains over 62 years.
Luck is a big part of trading, whether you like it or not.
You can’t control it, but you can control how well you prepare.
And the more prepared you are, the more often luck will show up on your side…
Happy trading,
Ben Sturgill
*Past performance does not indicate future results
