I keep trying to figure out what makes trading so hard. It's just a gambling game in a huge casino, but with everything stacked in the player's favor. We can choose: When to play Where to play How much to bet When to increase bet When to enter When to exit Maximum gain Maximum loss Etc, etc, etc. We can use any tools, notes, calculators, teams, basically anything we want. If it was blackjack, to compare, then we could count cards at the table using a handheld computer & vary our bet size whenever we wanted & double down whenever, etc, etc, etc. This trading/gambling game is all set up to make people very rich, but what goes wrong? A lot of very intelligent people do the opposite of getting rich. I was thinking about this a lot today & I think it comes down to the rules/framework of the game. In all the other casino games there is a very clear way to play, very clear rules, outcomes, etc. For instance in blackjack there is only 1 best mathematical way to play each hand. You memorize those ways, combine with card counting, & bet size & some people can rake in the dough. I think what goes wrong with trading is that there are no clear-cut rules, no clear-cut framework. A trader, unlike any other game I know of, has to create his own rules & own framework. That's problem #1. To do that you first have to figure out what you're looking at & figure out how price moves & acts & countless other things. That takes a lot of screen time. Someone new to trading or who hasn't stared at the screen or the numbers for a long, long time isn't going to have a clue. That's problem #2 for a beginner. After you acquire enough experience then you have to create your own framework & rules based on what you have witnessed. I don't think most people ever get far enough that they know their market well enough to create these trading rules. For example a double bottom forms in your market. What do you do? Buy when swing high is taken out, buy early, wait for a retrace & then buy, don't buy at all depending on where it forms, look for a short because you think it'll be a bull trap. You have to have all of this planned out ahead of time. Who actually does that? Anyway I think that is some of what makes trading so hard. I don't think it's discipline & patience & the things you hear over & over. Sure those are important, but if you have a well laid-out plan & you have confidence that it'll make you rich then patience & discipline come a lot easier. Anyway I wrote this mostly for my own benefit to get some thoughts out of my head. I would guess that very few traders have what I mentioned above. I would be one of them actually. Going to start working on that right now.
Albert Einstein allegedly said this: "I think the most important question facing humanity is, 'Is the universe a friendly place?' "For if we decide that the universe is an unfriendly place, then we will use our technology, our scientific discoveries and our natural resources to achieve safety and power by creating bigger walls to keep out the unfriendliness and bigger weapons to destroy all that which is unfriendly' "But if we decide that the universe is a friendly place, then we will use our technology, our scientific discoveries and our natural resources to create tools and models for understanding that universe. Because power and safety will come through understanding its workings and its motives."
You are on the right track. Also your rules should be based upon how to take advantage of the most traders that do not have you mentioned above, hence the "price action" on the chart like what it is shown on th "CL" chart today
All those things you mentioned are important, but the key element you are missing is the "vig" in the form of slippage and commissions. Blackjack does not have any vig. You have a slight disadvantage off the top of the deck in most blackjack games (depending upon the rules), but there is no vig. Therefore if you count the cards and employ a sound strategy you will win in the long run without a doubt. That is why the casinos are overly diligent in denying play to competent players. If traders did not have to pay commissions and could trade in the middle of the spread every time, a much higher percentage of traders would be profitable.
I think this is spot on. Discipline and psychology are always cited as important factors, and they certainly are - but all the discipline in the world won't help if you're patiently executing a losing strategy (or no consistent 'strategy' at all). This process of strategy development, refinement, live testing in the markets, more refinement, more testing, whoops that didn't work let's scrap it and start over... is why almost all successful traders took 3-6 years of full time work to reach any level of consistent profitability. There are of course additional layers of difficulty - not least the fact that if you want to play the markets, you have to play against a table full of elite professionals, whose livelihood is based around exploiting the same tendencies common to all new, inexperienced, or edgeless traders.
The answer you seek may partially lie in a related question. If people tried to lose consistently (using similar trading systems), I believe that they would have a lot of difficulty doing that as well. Why is that?
Trading can be of course gambling if you choose: But it is not gambling when you let the market choose: Try to understand the difference. Many losers don't.