• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Doug Kass
    • Bruce Kamich
    • Jim Cramer
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Stocks

Don't Ignore the Role of Luck

Shrewd traders know that chance is a big part of trading -- but success comes from thoughtful management thereof.
By JAMES "REV SHARK" DEPORRE
Dec 23, 2011 | 10:55 AM EST
Stocks quotes in this article: WWWW, VHC, INVN, FTK

We have some low-volume volatility to start the day. After some early flipping, the bulls are pushing once again. There actually are some signs of speculative action in small-caps which is something that has been missing from this market for ages.

I have positions in a few things I've mentioned lately, like Web.com (WWWW), VirnetX (VHC), InvenSense (INVN) and Flotek (FTK), but I have some medical appointments this afternoon so I'm not doing any aggressive adding. I just want to stay very short term and try to book some profits when I have them. I'm not thinking long term at all right now.

This morning I was contemplating an advertisement for an online broker I see on television quite often. A trader says, "Luck? I don't trade on luck." as a way to promote the software tools that the broker offers. I always end up thinking, "What a great idea. Just give me a tool that helps me avoid that bad luck that seems to occur so often."

It would probably be better if they used the word "hope rather than "luck" in this advertisement, but it is more dramatic this way. Traders should always have a rational basis for the trades they make rather than just rely on blind hope, but they'd better be aware that there is no way they will ever be able to determine what Lady Luck might do.

I take luck so seriously that I often think of trading as "luck management." It is inevitable that we are going to be surprised by news. Every trade we make is a gamble to some degree, since we can't predict the future. But what makes us astute speculators rather than wild gamblers is that we develop ways to manage the risks that we are taking. Speculators don't just dump it all on red, cross their fingers and spin the wheel. They make sure that bad luck doesn't kill them, and they try to take advantage of good luck when it strikes.

Don't deny the role of luck in trading. We have to deal with it constantly; the key to success is to manage it effectively.

I have to head back to the hospital today to deal with some minor setbacks on my hearing surgery. I should be back by the close, but if I'm not, I want to wish you a Merry Christmas and happy holidays.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

Long WWWW, VHC, INVN and FTK but positions can change at any time.

TAGS: Investing | U.S. Equity | Stocks

More from Stocks

I Got the 'SOS', So Here's My Take on the Stock's Saga

Timothy Collins
Feb 28, 2021 6:35 PM EST

Let's try to sort out the details of the complicated story of SOS Ltd. -- and why the short reports might be ... selling you short.

Bearish Bets: 2 Nasdaq Stocks You Should Consider Shorting This Week

Bob Lang
Feb 28, 2021 10:30 AM EST

These names are displaying both quantitative and technical deterioration.

Jim Cramer: What History Tells Us About Bond-Rate Scares Like This

Jim Cramer
Feb 27, 2021 2:01 PM EST

We could have some real pain ahead for some stocks. Five different kinds.

Navigating a Market Correction

James "Rev Shark" DePorre
Feb 27, 2021 10:00 AM EST

The most critical factor in long-term market success is the ability to effectively navigate market corrections.

Corrective Action Produces Fading Confidence and Technical Damage

James "Rev Shark" DePorre
Feb 26, 2021 5:08 PM EST

It's dangerous to have too much exposure now, but the potential for a good recovery is there once interest rate issues are digested.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 11:51 AM EST REAL MONEY

    Watch Bob Lang and Doug Kass Discuss Short-Selling!

    Bob Lang and Doug Kass with an engaging and educat...
  • 11:32 AM EST JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    Navigating a Market Correction
  • 11:29 AM EST GARY BERMAN

    Where Does the Nasdaq Go From Here?

    Where does the Nasdaq Composite (CCMP) index go fr...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2021 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login