Avoiding Outcome Bias

One Good Result Does Not Prove a Successful Strategy

Adam Sarhan says, if your risk is properly managed, the result of any single trade doesn't really matter in the long run. Success in the market comes from making smart decisions that create a good aggregate result over the course of multiple trades in varying market conditions. Anyone can get lucky every once and a while, and if you judge success by counting lucky trades, that's called outcome bias. If you manage to cross a busy street blindfolded and don't get hit by a car, it doesn't mean it was a good idea. In the market, long-term success comes from patience and discipline.

This podcast and article are for informational purposes only and do not constitute financial advice. Last Week in the Market is intended for self-guided, independent traders who understand there is inherent risk when trading in the market. You are responsible for your own trading decisions.