Many people message me privately asking:
“What kind of ability do you need to make a living from trading?”
This question seems complicated.
Some people will tell you that you need to understand technical analysis, understand macroeconomics, know how to read candlestick charts, be able to track capital flows, study the fundamentals, know how to quantify, and understand cycles.
These, of course, all have value.
But if you break the problem down to its core, I increasingly feel that:
A person who can genuinely get results from the trading market over the long term really only has two key abilities—being able to read the market, and being able to read yourself.
The first ability determines whether you can find opportunities.
The second ability determines whether you can hold on to opportunities.
What truly keeps most people out of the door of a trading career is not the first type—it’s the second type.
One: the harshest thing about trading— the market will never reward you for your effort
Let me first state a fact that many new traders are unwilling to admit:
Trading isn’t an industry where effort definitely leads to returns.
Spending a dozen hours researching every day doesn’t mean you’ll earn more than others.
Reading a hundred trading books doesn’t mean your next trade will definitely be correct.
Watching the market for 18 hours a day doesn’t mean the market will give you one more chance to make money.
Even the opposite is true.
The trading market has something very counterintuitive:
The harder you try, sometimes the easier it is to lose money.
Because effort easily turns into “overtrading.”
You feel like you researched a lot today, so you must do something today.
You think you’ve already read the market, so you have to place an order.
You think you’ve spent so much time watching the screen, so you can’t return empty-handed.
In the end, research turns into trading, trading turns into frequent trading, and frequent trading turns into commissions, slippage, emotions, and compounded mistakes.
Barber and Odean’s research on individual investors’ trading behavior found that the most active traders actually have worse net performance; researchers believe that overconfidence is one of the key reasons for overtrading.
This is exactly something traders should be wary of:
The market doesn’t reward you for “doing more”—it rewards you for “doing it right.”
And what people call “doing it right” isn’t that every prediction is correct.
It’s actually:
Over the long run, the money you earn is greater than the money you lose.
That’s the real underlying logic of trading.
Second: the first ability—being able to read the market
What people call “reading the market” isn’t predicting the future.
This is the one thing many new traders get wrong the easiest.
A real trader doesn’t need to know for sure whether BTC will go up or down tomorrow.
Because the question itself has no definite answer.
What’s truly important is:
When the market is in a certain state, you know what you should do.
For example:
When a trend arrives, you know how to trade the trend.
When range/trading choppily comes, you know how to handle the chop.
When there’s no opportunity in the market, you know when not to trade.
If a sudden event happens, you know when to reduce your position size.
When the price rises quickly, you know whether it’s trend continuation, a climax of emotions, or the final round.
When prices drop quickly, you know whether it’s a normal retracement, a trend reversal, or a liquidity crash.
That’s what it means to truly read the market.
Many people think the hardest part of trading is finding a “magic indicator.”
Actually, no.
What’s truly hard about the market is:
With the same candlestick chart, different people see completely different things.
Someone sees a breakout.
Someone sees a bull trap.
Someone sees the trend.
Someone sees the risks.
Someone sees opportunity.
Someone sees nothing.
So the real problem that trading education should solve is not:
“Tell me whether the next candlestick will go up or down.”
But it’s also:
“Give me a market condition—how should I build a probability edge?”
Three: The market isn’t actually that hard—what’s hard is what kind of money you want to make
I even think that simply learning “how to read the market” isn’t as hard as many people imagine.
You can learn trends.
Learning support and resistance.
Learn to read volume.
Learn volatility.
Learn cycles.
Learn macro.
Learn fundamentals.
Learning capital management.
If your learning ability is good, and you also have someone guiding you systematically, within a few months—or even shorter—you can build a basic framework for understanding the market.
What’s truly difficult is the next step:
What kind of money are you really suited to make?
These are completely different issues.
For example, the same BTC bull market cycle.
Someone makes money by trading trends.
Someone makes money with swing trading.
Someone makes money by holding spot positions for the long term.
Someone does arbitrage.
Someone trades options.
Someone does short-term trades.
Someone specializes in capturing event-driven opportunities.
There are also people who specifically look for extreme market conditions.
It’s the same market situation.
But the way of making money is completely different.
So a real trading system shouldn’t only answer:
“How will the market move?”
You still have to answer:
“Which part of the market am I going to make money from?”
That’s the real professional positioning of a trader.
Four: the second ability—being able to read yourself
I think this is the hardest lesson in trading.
Maybe even the hardest course in human cognition.
Because when you study the market, others can teach you.
See yourself—others can hardly complete it for you.
Someone else can tell you:
What is a trend?
What does it mean to break out?
What is a drawdown?
What is a stop-loss?
What is position sizing?
What does risk-reward ratio mean?
What is expected value?
But nobody can directly tell you:
What kind of person are you, really?
How much drawdown can you actually endure?
After you’ve consecutively lost five times, will you lose control?
After you make 30%, do you start to inflate yourself?
Do you like the excitement of short-term trades, or the long-term compounding?
Do you truly love trading, or are you just in a hurry to make money?
Can you accept having no obvious returns for half a year?
Can you tolerate someone doubling their money in a month while you’ve earned nothing?
Can you, when you’re right, only make the part that belongs to you?
There isn’t any indicator that can tell you the answers to these questions.
Only you can do it.
Five: Many people’s problem isn’t that their ability is too low—it’s that their desire is too high.
This is the sentence I think is the most worth talking about in trading:
Many people’s pain isn’t because their ability is too poor—it’s because their desire far exceeds their ability.
This sentence also holds in real life.
A person’s income, resources, abilities, cognition, and social position determine what kind of life they can obtain.
But human desire can expand infinitely.
So a huge mismatch is created.
The trading market is the same way.
A person with only 10,000 USD in capital fantasizes about making 100,000 USD in a year.
Someone who has only learned for three months hopes to stably achieve 20% monthly returns.
Someone whose account has just drawn down by 10% starts researching how to “flip it all back” with one shot.
The problem is:
Can your system truly support your desires?
If not, the market will eventually correct you.
And the way the market corrects people is very simple:
Lose money.
Six: The biggest danger in trading is using the wrong system to satisfy the correct desire.
Assume a person needs $5,000 per month just to live.
But his trading account only has 50,000 USD.
Then they naturally face tremendous pressure.
Because he needs to take 10% out of the 50,000 USD every month.
So he starts thinking:
“I have to catch the big move.”
“This opportunity can’t be missed.”
“Have a slightly bigger position.”
“Stop-loss can’t be too tight.”
“If I can make 20% this time, it’s enough for me to spend for a few months.”
You’ll find that:
He isn’t really trading.
He is using trading to solve cash-flow problems.
At this point, for him the market is no longer a market—it’s a cash machine.
So every drawdown turns into a psychological disaster.
Every missed chance turns into anxiety.
Every loss triggers the next attempt to add more.
In the end, what truly crushes him is often not the market, but:
His capital structure doesn’t match his desires.
Seven: What trading system you’re suited for depends on who you are
That’s also why I’ve always believed:
There is no trading system in the world that fits everyone.
Someone is naturally patient.
He can hold for half a year, even a year.
Then trend and medium-/long-term systems are probably better suited for him.
Some people are extremely sensitive.
With the slightest change in the market, he can immediately notice it.
But then they can’t tolerate a big drawdown.
Then they may be better suited for shorter time cycles.
Some people like high-frequency trading.
Some people hate frequent trading.
Someone likes fundamentals.
Someone likes price action.
Some people like certainty.
Someone is willing to take on uncertainty in exchange for higher odds.
None of these are absolute right or wrong.
The real problem is:
Does your system match your personality?
Trading master Van Tharp also emphasizes long-term that a trading system needs to match the trader’s goals, beliefs, and psychological traits; position management determines “how many you should buy,” not just “what to buy.”
This sentence is actually especially important.
Because when many people look for a trading system, what they ask is:
“What system makes the most money?”
But you should ask more:
“What system can I execute long-term?”
These two questions are vastly different.
Eight: True trading ability isn’t predicting—it’s managing probability
The biggest misconception among many new traders is believing that高手 (experts) should have an extremely high win rate.
Actually, no.
A trading system can have only a 40% win rate and still make money over the long term.
Why?
Because trading isn’t an exam.
It’s not that answering 60 out of 100 questions correctly automatically makes you better than someone who answers 40 correctly.
Assume a system:
10 trades: I lose 6 times, and each time I lose 1R;
He makes 4 wins, each time gaining 3R.
So the end result is:
Lose 6R, make 12R.
In the end, it’s still +6R.
So what trading truly should study is:
Expected value.
Not just win rate.
That’s also why you’ll see some extremely capable traders stop out often.
They are not afraid of stop-loss.
Because what they truly fear is:
One mistake wipes out everything that was correct for dozens of past trades.
Nine: so the third ability is actually—risk management
If we must further break down “reading the market” and “reading yourself,” I believe there’s another bridge in between:
Risk management.
Because reading the market solves “whether there’s an opportunity.”
Reading yourself solves “can I endure it.”
Risk management solves:
Even if I’m wrong, can I still keep playing?
CFTC clearly warns that high-leverage trading such as futures is highly volatile and complex; many retail traders lose money, and may even lose more than the initial capital invested.
That’s why professional traders always focus on:
Position sizing.
Leverage.
Maximum drawdown.
Risk per trade.
Correlation.
Liquidity.
Extreme market conditions.
A streak of losses.
Not only focusing on:
“Can this coin go up 10x?”
Because whether a coin goes up ten times has nothing to do with you—it depends on whether you managed to survive to that day.
Ten: Sometimes position sizing is more important than direction.
The same trading opportunity:
A buys 10,000 RMB.
B buys 100,000 RMB.
C goes all-in and bets 1 million RMB.
Assume all the final judgments are correct.
The money they make is completely different.
But what if the direction judgment is wrong?
The results are completely different as well.
That’s the power of position sizing.
Van Tharp has long regarded position sizing as a very critical part of a trading system; what it solves is not “what to buy,” but “how much to buy.”
So:
Trading isn’t a yes-or-no question; it’s a probability question plus a position-sizing question.
If you judge correctly, that only means your direction might have an edge.
How much money you eventually make depends on how much risk you take on.
Eleven: the fourth ability—accepting that you can’t make all the money
This is a lesson many people never learn.
The bull market comes.
A certain coin rises 10x.
You didn’t buy.
What should we do?
Many people’s first reaction is:
“I missed it.”
And then they start chasing.
The result is: you just went in, and the market is over.
A truly mature trader would say:
“This money doesn’t belong to me in the first place.”
This sentence sounds very “Buddha-like.”
In practice, it’s highly professional.
Because the market creates countless opportunities every day.
You don’t need to capture every opportunity.
You only need to hold on to:
Your opportunities.
If you’re a trend trader, wait for the trend.
If you’re a short-term trader, just wait for the short-term opportunities.
If you’re a value investor, just wait for value.
If you’re an event trader, just wait for the events.
Missing out is not a loss.
The real loss is being afraid of missing out and taking a trade that never belonged to you.
Twelve: the fifth ability—accepting boredom
This is the ability most easily overlooked in a trading career.
Traders who make money truly long-term are often very boring.
When there’s no setup in the market, don’t trade.
If opportunities don’t match the system, don’t do it.
If your position exceeds the standard, don’t trade.
If the risk-reward ratio isn’t good, don’t do it.
If your emotions are unstable, don’t do it.
If your account status is bad, don’t do it.
Even several days or weeks without trading.
Ordinary people think:
“Do you have no ability?”
Professional traders know:
Not trading itself is a type of trading ability.
SEC’s early investor education materials specifically warned that day trading is not only very risky, but also requires constant monitoring, high concentration, and that trading costs will continuously erode results.
So:
Trading isn’t about who is the most hardworking—it’s about who can restrain themselves the best.
Thirteen: the sixth ability—being able to take responsibility for the outcomes independently
The harshest thing about trading is that nobody will take the blame for you.
When you make money, it’s yours.
When you lose money, it’s still yours.
You can’t blame the teacher.
You can’t blame KOLs.
You can’t blame the market maker.
You can’t blame the exchange.
You can even’t blame the market.
Because in the end, the one who presses the buy and sell buttons is you.
That’s also why trading forces a person to grow quickly.
Because you’ll slowly discover:
The market is just a mirror.
You’re greedy, and it amplifies your greed.
You’re afraid, and it amplifies your fear.
You’re arrogant, and it amplifies your arrogance.
If you’re eager to get back to even, it gives you more temptations.
You don’t have discipline, and it makes your mistakes happen one after another.
So in the end, when you do trading for real, you’re not really researching candlestick charts.
It’s you.
Fourteen: Why can’t most people make a living from trading?
Because “making a living from trading” is one dimension higher than “making money from trading.”
Making money occasionally is easy.
In a bull market, many people can make money.
Sometimes, you can even rely purely on luck.
What’s truly difficult is:
Consistently staying alive and doing it stably for many years.
Academic research also provides a very harsh reality.
Research on day traders in Taiwan found that while there truly exists a small portion of traders who can consistently perform extremely well, in the research sample, fewer than 1% of people could reliably and predictably achieve positive abnormal returns after deducting fees.
This means:
Trading isn’t a profession where you can make money just by “learning.”
It’s more like sports competition.
Learning to shoot hoops doesn’t mean you can get into the NBA.
Learning to play the piano doesn’t mean you can become a pianist.
Learning trading skills doesn’t mean you can support yourself by trading.
Knowledge is just an entry ticket.
What truly determines whether you can stay in the game is:
Ability × Discipline × Risk × Personality × Capital.
Fifteen: People who are truly suited for trading are often not the smartest ones.
Many people think traders must be exceptionally smart.
I actually think:
You don’t necessarily need someone insanely smart to trade, but you definitely need someone who can honestly face themselves.
Because smart people sometimes end up finding reasons to justify themselves instead.
When you lose money:
“It’s just the market that was wrong.”
After you’ve set a stop-loss:
“If only I had waited one more day.”
After you’ve had a streak of profitable trades:
“Turns out I’m smarter than the market.”
And then they start increasing their position size.
Then the market will educate you with a single trade:
The money you earned in the past doesn’t mean you’re entitled to earn in the future.
A truly mature trader does one thing every day:
Continuously correcting yourself.
Sixteen: Reading yourself clearly ultimately means figuring out these ten questions
If you truly want to make a living from trading, I suggest you seriously answer the following ten questions.
First:
How much money do I really want to make?
Second:
Can my principal support this goal?
Third:
How much maximum drawdown can I endure?
Fourth:
After I lose money ten times in a row, will I change the system?
Fifth:
Do I like the excitement of short-term trades, or long-term compounding?
Sixth:
How much time am I willing to spend trading per day?
Seventh:
Am I good at trends, ranges, or event-driven strategies?
Eighth:
After I lose money, is it cold, rational analysis—or am I rushing to get it back?
Nine:
When others are making money, can I hold back and not chase?
Tenth:
If I don’t make any money in the next six months, can I still keep following the system?
If you can’t answer these ten questions,
So what you may be missing right now isn’t an even better indicator.
It’s actually:
You don’t know yourself well enough.
Seventeen: The end point of trading isn’t “getting more and more accurate”
After studying trading for years, many people still research every day:
“How can I raise my win rate from 55% to 60%?”
But I think the real growth path in trading is actually:
From trading markets to understanding markets.
From understanding the market to understanding yourself.
From understanding yourself to building a system.
From building a system to managing risk.
From managing risk to stable execution.
Finally, from stable execution, it goes to:
You don’t need to prove yourself.
At this stage, you won’t get excited about how much you made from one trade, and you won’t collapse because of one stop-loss.
You start accepting:
There’s always an opportunity in the market.
And there’s always risk.
You don’t know the outcome of your next trade.
And you know that:
How you should act.
That’s the real certainty of a trader.
Eighteen: So what kind of person can make a living from trading?
If I have to compress everything into one sentence at the end:
Being able to make a living from trading isn’t necessarily the person who understands the market best; it’s the person who knows who they are, how much they can earn, what risk they can handle, and can execute the same set of rules year after year.
Reading the market is knowledge.
Reading yourself is cognition.
Controlling risk is a skill.
Consistent execution is discipline.
Accepting uncertainty is maturity.
And what true trading experts ultimately pursue is not:
“Can I get it right every time?”
But it’s actually:
“Even if I often get it wrong, can I still live long-term?”
That’s the real underlying logic of trading.
Because the market never requires you to be correct forever.
The market only requires you to:
When you’re wrong, you can afford the loss; when you’re right, you can hold on; when you have an opportunity, you dare to act; when there’s no opportunity, you know how to wait.
In the end, trading is an extremely long journey of self-discovery.
You think you’re researching BTC, stocks, gold, and candlestick charts.
When you research to the end, you’ll find that:
What you’re researching is always yourself.
How big is your desire?
Where your cognition is.
How much patience do you have?
Where is your fear?
What kind of system fits your personality.
How many mistakes your capital allows you to make.
How much fluctuation can your psychology tolerate?
These things ultimately all decide your trading results.
So I’ve always believed:
The hardest part of trading is never finding a way to make money, but finding a way to make money that fits you.
When a person’s ability, capital, system, desires, and personality finally start to match, trading truly turns from “gambling” into a profession.
And as for “making a living from trading,” the real threshold may never be:
Can you make a lot of money?
Instead, it's:
Can you not get killed by your own desires over the long run?
This is the moat that a real trader has to cross.