I have seen many posts of guys who have dedicated 5-10+ years of their lives trading and still are not profitable despite all their efforts.
I guess some would even agree that had they taken some other path towards success they would be in a much better state in life.

What I've heard from other traders is that the '95% of traders' who are not profitable don't have the required technical knowledge, don't have any proper money management rules, and let their emotions get in the way.

I'd say traders who have many years of experience aren't lacking in the knowledge department, would have learned the importance of money management as well after all this time, and after trading for so many years, they probably would have become desensitized to the thrill/fear of making/losing money.

So why aren't these people profitable then? What are they missing? What else is required aside from market knowledge, money management, and emotional discipline?

Is this one of those "asking for a friend", type questions?

My own thoughts from my own struggles:

Practical things: The market can only go up or down, how hard can it be. Then they realise it is very hard but feel they are close to being profitable, unfortunately that feeling of being just 'almost there' can last a very long time.

They focus on trying to cut out losses and get a very high win rate and look for 'Holy Grail' indicators and never find it. They continuously go back to in effect starting again and again by frequently changing everything they do or use. Also purchasing new methods and system to the same effect.

In built psychological traits: Trading is counter intuitive, animals and humans are most comfortable following the pack yet the Buffett quote “Be Fearful When Others Are Greedy and Greedy When Others Are Fearful” can result in much better risk to reward. Instinctive following the herd is frequently chasing momentum and that can produce lots of little profits but quick large losses when price suddenly reverses in a squeeze. But people like high win rates because we don't like being wrong seeing it as a reflection on our own analysis rather than a probabilities game.

We are uncomfortable with uncertainty so wait for lots of confirmation which can result in worse trade location and poor Reward/Risk. Often the best trades are the hardest to take because they are going against current momentum.

People try to cope with their emotions high jacking themselves by telling themselves they need to trade like a machine which is impossible so they can't. They can't beat a machine for being able to follow a rules based system and the only advantage they have over a machine is that they do have emotions.
They might benefit from listening to their empathy and emotions because a lot of other traders will be feeling what they are feeling which means that it can be a window on what the 'competition' is feeling, eg, I strongly want to chase the market higher as it keeps legging up without me, I can barely resist pressing the buy button, a lot of other people are probably doing the same so looking for a short after what looks like their final capitulation flush higher could be a much better trade. Probably better to listen to your emotions rather than trying to suppress them in fear of being caught up in them and acting impulsively.

Traditionally people get jobs that pay them for turning up and doing something. With trading you can turn up and at the end of the day, you're down money and are often angry with how you performed. Paying to be kicked in the b*ll*cks on a regular basis isn't anybody's idea of a dream job which can make it hard to inspire the motivation to work on improving.

The markets can be different every day and results are inconsistent and some days can just be lucky.

Focusing on probabilities, performing well and ignoring the day to day results and concentrating on the long term expectancy. Unfortunately we prefer instant gratification and are not good with waiting for long term results to play out.

So basically I think trading well can be uncomfortable and go against our natural instincts which makes it very hard to do in real time, yet at the end of the day we think it is very clear what we should have done, or what the market was going to do so we try again the next day. Unfortunately that is frequently ingraining the bad habits instead of trying to produce new learning habits and behaviours.

Retail versus professional: And lastly, retail traders are often trading in a vacuum with only online strangers of indeterminate ability and unknown truthfulness for reference.
Professional traders on the other hand have a support system where they can see people being successful using the same equipment and tools that they have which provides motivation. They are expected to behave professionally and work hard at improving with pre-market analysis, extensive post trade journaling of things they did badly and things they did well (from what I have read, I have no first-hand experience). Writing down how they can work to improve or reduce the things that went badly, and also focus on and continue to do the things that work well.
They set goals and measure their results in achieving those goals. It is serious work whereas retail traders can often see it as an easy get rich quick hobby, side gig, part-time job. The ones who succeed are the ones who don't just work hard (often traders who are losing money are working very hard to improve too), but they are systematically working to improve themselves: 1. Identify a trading problem. 2. Develop a solution. 3. Determine how I will implement the solution. 4. Measure the effectiveness of the solution. Repeat.

(A selection of thoughts, probably some more valid than others IMHO)

matthew28 

Is this one of those "asking for a friend", type questions? My own thoughts from my own struggles: Practical things: The market can only go up or down, how hard can it be. Then they realise it is very hard but feel they are close to being profitable, unfortunately that feeling of being just 'almost there' can last a very long time. They focus on trying to cut out losses and get a very high win rate and look for 'Holy Grail' indicators and never find it. They continuously go back to in effect starting again and again by frequently changing everything they do or use. Also purchasing new methods and system to the same effect. In built psychological traits: Trading is counter intuitive, animals and humans are most comfortable following the pack yet the Buffett quote “Be Fearful When Others Are Greedy and Greedy When Others Are Fearful” can result in much better risk to reward. Instinctive following the herd is frequently chasing momentum and that can produce lots of little profits but quick large losses when price suddenly reverses in a squeeze. But people like high win rates because we don't like being wrong seeing it as a reflection on our own analysis rather than a probabilities game. We are uncomfortable with uncertainty so wait for lots of confirmation which can result in worse trade location and poor Reward/Risk. Often the best trades are the hardest to take because they are going against current momentum. People try to cope with their emotions high jacking themselves by telling themselves they need to trade like a machine which is impossible so they can't. They can't beat a machine for being able to follow a rules based system and the only advantage they have over a machine is that they do have emotions. They might benefit from listening to their empathy and emotions because a lot of other traders will be feeling what they are feeling which means that it can be a window on what the 'competition' is feeling, eg, I strongly want to chase the market higher as it keeps legging up without me, I can barely resist pressing the buy button, a lot of other people are probably doing the same so looking for a short after what looks like their final capitulation flush higher could be a much better trade. Probably better to listen to your emotions rather than trying to suppress them in fear of being caught up in them and acting impulsively. Traditionally people get jobs that pay them for turning up and doing something. With trading you can turn up and at the end of the day, you're down money and are often angry with how you performed. Paying to be kicked in the b*ll*cks on a regular basis isn't anybody's idea of a dream job which can make it hard to inspire the motivation to work on improving. The markets can be different every day and results are inconsistent and some days can just be lucky. Focusing on probabilities, performing well and ignoring the day to day results and concentrating on the long term expectancy. Unfortunately we prefer instant gratification and are not good with waiting for long term results to play out. So basically I think trading well can be uncomfortable and go against our natural instincts which makes it very hard to do in real time, yet at the end of the day we think it is very clear what we should have done, or what the market was going to do so we try again the next day. Unfortunately that is frequently ingraining the bad habits instead of trying to produce new learning habits and behaviours. (A selection of thoughts IMHO).

Thank you for the reply, I'm still in my 2nd year in trading and until recently I had the belief that the only reason most people fail is that they quit before they can get through that initial learning curve, but I was surprised to see some old posts of people with 10+ years in trading but still struggling, What you said about trading being counter-intuitive makes a lot of sense, I guess trading requires most people to change themselves which by nature, most are unable to do.

bavan666 

Thank you for the reply, I'm still in my 2nd year in trading and until recently I had the belief that the only reason most people fail is that they quit before they can get through that initial learning curve, but I was surprised to see some old posts of people with 10+ years in trading but still struggling, What you said about trading being counter-intuitive makes a lot of sense, I guess trading requires most people to change themselves which by nature, most are unable to do.

You can change all you want, but it does not relate directly to profitability in trading.

If I tell you 3 things, and you do it for 3 weeks to make sure you understand, under my supervision (3 min. a day), you would start being profitable after a month.

andrej 

You can change all you want, but it does not relate directly to profitability in trading. If I tell you 3 things, and you do it for 3 weeks to make sure you understand, under my supervision (3 min. a day), you would start being profitable after a month.

Can you tell me what these 3 things are?

Sure, first tell me what are your beliefs, why do you trade? Also do you really know what 666 (used in your username) is derived from?

andrej 

Sure, first tell me what are your beliefs, why do you trade? Also do you really know what 666 (used in your username) is derived from?

Don't pay too much attention to my name lol, I created that for an online video game when I was 13 and have a tendency to keep my username across different websites the same, so I'm still using it.

Why do I want to be a trader?

I think trading is the perfect thing for me to do, everything about it appeals to me. First off, when I'm trading, it's just me and the markets, if I'm good enough I'll make a decent living from it, if not then I won't, the entire "you eat what you kill" sort of thing is what attracts me here the most, no office politics bs, just you and your skills.

I enjoy analyzing the market, taking in all the information that it is giving me, and trying to figure out what it's saying, I've been a huge fan of detective stories since I was a kid, from what I've seen so far, being a trader is a lot like being a detective, you try to pick up on all the little clues the market is dropping to figure out who is in control of the market, I find this to be very interesting, I can't think of any other career that would be as fun as this, trading would allow me to become a part of something much bigger than myself, which is the market.

Now I know the picture isn't as rosy as I make it sound here, and I know that there are tons of problems that will come that I'm not even aware exist yet, but all in all, I can't see myself doing anything else other than this in life.

bavan666 

Don't pay too much attention to my name lol, I created that for an online video game when I was 13 and have a tendency to keep my username across different websites the same, so I'm still using it. Why do I want to be a trader? I think trading is the perfect thing for me to do, everything about it appeals to me. First off, when I'm trading, it's just me and the markets, if I'm good enough I'll make a decent living from it, if not then I won't, the entire "you eat what you kill" sort of thing is what attracts me here the most, no office politics bs, just you and your skills. I enjoy analyzing the market, taking in all the information that it is giving me, and trying to figure out what it's saying, I've been a huge fan of detective stories since I was a kid, from what I've seen so far, being a trader is a lot like being a detective, you try to pick up on all the little clues the market is dropping to figure out who is in control of the market, I find this to be very interesting, I can't think of any other career that would be as fun as this, trading would allow me to become a part of something much bigger than myself, which is the market. Now I know the picture isn't as rosy as I make it sound here, and I know that there are tons of problems that will come that I'm not even aware exist yet, but all in all, I can't see myself doing anything else other than this in life.

Sounds good. I'll ask you 3 questions, with short explanation why.

1. Do you have a regular income or you just plan to make it in trading asap? Profitable trading with scared money is not possible, success urgency is counterproductive.

2. What is your professional background, education, skills, sports? Well-rounded, versatile, and disciplined mind-body is hard to teach if not inborn to some degree.

3. What is your current trading approach? You already have some habits that might help or hinder the process.

andrej 

Sounds good. I'll ask you 3 questions, with short explanation why. 1. Do you have a regular income or you just plan to make it in trading asap? Profitable trading with scared money is not possible, success urgency is counterproductive. 2. What is your professional background, education, skills, sports? Well-rounded, versatile, and disciplined mind-body is hard to teach if not inborn to some degree. 3. What is your current trading approach? You already have some habits that might help or hinder the process.

I'm 20 now and pursuing a degree in business finance currently, I've been learning methods of trading for the past 1.5 years, I attend my classes in the morning and learn about trading & sim trade on the market playback in the evening, now I'm hoping that I can get good enough at this so that I can start trading full time as soon as I graduate (2 years from now), but if that somehow doesn't end up working out I can get a job and keep on practicing till I get good enough.

I don't plan to make it in trading asap, I know it will most likely take me 2-3 years more at least to see any success and I'm okay with that.

My dad is a long-term investor in the market and he is very supportive of me becoming a trader (he is the one who introduced me to financial markets in the first place, I'm very grateful that he did), he can afford to take care of my expenses for the initial few years until I can start making money consistently.
In terms of sports, I've been playing football(Soccer) for many years now and before I gave my all to learning trading, I used to play chess as well.

When I started trading, I was focusing more on using different indicators, I was using a combination of RSI, Macd, Bollinger Bands, Moving averages to create a system, but didn't get any success with that, I've now shifted my approach to trying to understand why the market moves rather than using different crossovers to get signals

For that, I'm currently trading with (and still in the process of learning) Wyckoff market theory, Auction market theory (market profiles), and order flow charts.

bavan666 

I'm 20 now and pursuing a degree in business finance currently, I've been learning methods of trading for the past 1.5 years, I attend my classes in the morning and learn about trading & sim trade on the market playback in the evening, now I'm hoping that I can get good enough at this so that I can start trading full time as soon as I graduate (2 years from now), but if that somehow doesn't end up working out I can get a job and keep on practicing till I get good enough. I don't plan to make it in trading asap, I know it will most likely take me 2-3 years more at least to see any success and I'm okay with that. My dad is a long-term investor in the market and he is very supportive of me becoming a trader (he is the one who introduced me to financial markets in the first place, I'm very grateful that he did), he can afford to take care of my expenses for the initial few years until I can start making money consistently. In terms of sports, I've been playing football(Soccer) for many years now and before I gave my all to learning trading, I used to play chess as well. When I started trading, I was focusing more on using different indicators, I was using a combination of RSI, Macd, Bollinger Bands, Moving averages to create a system, but didn't get any success with that, I've now shifted my approach to trying to understand why the market moves rather than using different crossovers to get signals For that, I'm currently trading with (and still in the process of learning) Wyckoff market theory, Auction market theory (market profiles), and order flow charts.

Sounds good. Out of the 3 things the first one is Risk/Reward Ratio (RRR). What do you know about RRR and do you apply it in your current trading?