The root cause that makes trading so difficult is mainly due to a seldom talked about or recognized aspect of trading which is called the amygdala hijack.
Trading and money is akin to survival, it affects the part of our brain called the amygdala or the reptilian brain. It is an evolutionary knee jerk reaction that triggers pain or pleasure, fear or hope. So if one wins a trade, there is great euphoria, followed by fantasies of wealth, if one loses, there is great pain, regret and frustration, usually followed by anger and revenge (trading).
On a cognitive level, you can say do this or do that when standing on the sidelines looking in, kinda like yelling at the players when watching a game. However, when an individual is IN the game, that objective perspective is replaced by a very deep and total animal sense of survival, there is very little to no subjectivity. That is why it is hard to see the market clearly when one has something at stake in it. You are mainly just focused on how near or far the market is from your entry point.
So to be good at trading, a person has to have a great sense of self awareness and emotional intelligence more than anything else. It is a fallacy that most people believe you have to be good at math to trade. That couldn’t be further from the truth. Trading is mainly pattern recognition, which is very straight forward, in truth 90% of trading it is being able transcend your emotions when they arise. Note, that I didn’t say remove or ignore your emotions.
Trying to say, “don’t feel fear”, or “be emotionless”, is like trying to say don’t be frightened when watching a horror movie. That is not to say you can’t subvert it, you can, BUT first you must recognize what the situation is and realize what you are getting into. Then, once you know the playing field, you can mentally prep yourself before getting into it and be ready for when the emotions DO arise. This takes effort and lots of practice.
The majority of trading is to dissociate with the emotions that arise as you watch the rise and fall of the markets. It is the ability to very gradually realize that what your emotions say is happening, meaning fear of loss (aka death) or hope of gain (aka safety and immortality), does not actually have any meaning.
That is why the people who have traded and succeeded after a certain period of time (regardless of whether they are pros, retail traders, phd.s or high school dropouts) usually say that making money is rote, meaning mechanical, even boring. That is because the natural, instinctual sense of life or death that is hardwired in the amygdala is not kicking in to give one great highs or intense suicidal lows.
So if a trader does not recognize this very root sense that arises during trading, then no technique, strategy or amount of academic education will equate to success in the markets. This is why so many fail. It is not because they are stupid or incapable, it is because one has to first identify what really is the cause of their mistakes and then ALSO have the ability to change it.
The amygdala hijack reflex is so evolutionarily hardwired into our systems that it is very hard to transform, BUT it can be done! So to those of you who are willing to dig deep into your own selves, then this will be a journey worth taking as it will not only affect your trading account and financial health, but your overall outlook as a human being, as in the end, you will not be as swept away by the tides of fear and hope as most people are.