The following is from an interaction I had with a friend who was a losing trader and wanted some help. He had memorized every bit of “trading knowledge” and could name just about every single YouTube “trading guru” but still wasn’t profitable.
Hopefully it helps some of you still struggling, it’s simple but probably not what you were lead to believe.
Friend: Dude, what the hell is going on? Feels like the markets are manipulated, why does price always hit my stop loss and then reverse and take off in the direction I predicted? I’ve been trying for years to be profitable. I read every book, watched every YouTube video, know my technical analysis….what am I missing?
Me: Faulty wiring in the head
Friend: Huh? Is that supposed to be some wise old trading guru one-liner? LOL! 
Me: You’re mentally wired to be an academic (his day job), it’s what makes you a great academic, but it makes you a terrible trader. You need to think more like a profitable trader and actually apply trading skills.
Friend: Bro, I already know all this stuff. I’ve gone through so many indicators and systems, I don’t risk more than 2% per trade, I try to have a 1:3 R:R, I’m working on trading psychology to manage my emotions…
Me: You have trading knowledge, that’s not the same thing as thinking like a professional trader and having actual trading skills. I can watch hours and hours of videos of how rocket engines work and read tons of books about rocket engine mechanics, but it doesn’t mean I can now build rocket engines.
Friend: Oh my wise old smart-ass trading guru, please tell me how does a professional trader think?
Me: Let’s make it simple. What are the mathematics behind profitable trading?
Friend: Win more than you lose
Me: Right, so let’s take these 2 sides of the equations: wins and losses. In your case, are you not profitable because you are winning too little or losing too much?
Friend: Well, I’m still trying to find a system that will give me a higher win rate….
Me: Ok, not quite what I mean. What’s your interpretation of the phrase “Cut your losers and let your winners run”? How are you implementing it?
Friend: Yeah, it’s about finding a system with a combination of indicators that will minimize losing trades and maximize the number of winning trades.
Me: Ok here’s your first misunderstanding. It’s not about trading systems, it’s a way of thinking and 2 specific trading skills: cutting losing positions and squeezing as much as possible out of winning trades.
Friend: Yeah, but isn’t that what a trading system is supposed to do?
Me: We’ll get back to that a little later. Let’s talk “trading psychology”, what does a professional trader feel when he wins and when he loses?
Friend: From what I read, nothing. He doesn’t get euphoric after a win and doesn’t get depressed after a loss. They got some Jedi mind-trick, Zen Buddha thing going on.
…… 10 minutes later
Me: Ok, let’s do some manual trading on historical data. Pick any currency pair and a timeframe. Then go back in time to some random date. Now we’re going to forget all indicators and trade naked charts. We’re going to use a 1:1 risk-to-reward. And we’re going to flip a coin for entries: heads you go long, tails you go short.
Friend: Oohhhkaaaay
After 20 trades….
Me: Ok, what did you notice?
Friend: Nothing, we’re pretty much at break even.
Me: Right, you would have blown the account already, so the coin is a better trader than you! Lol!
Friend: Real funny bro! Lol!
Me: Ok, the point here is that we have a 50:50 expectancy. So now let’s actually apply some trading skills. On the next 20 trades, we’re going to ignore wins and losses, we don’t care what the P&L will be. You are only going to focus on recognizing a losing trade as soon as possible and your job is to cut it before it hits the SL. Don’t worry about the winners, let them run and hit the TP.
20 trades later….
Me: Ok, so another 20 trades, what’s the tally?
Friend: We’re slightly in profit
Me: And what did you feel when you made a loss?
Friend: Nothing, I was just focused on trying to cut the losers as quickly as possible
Me: And what did you feel after a winner
Friend: Nothing, I wasn’t even thinking about them. Matter of fact, it didn’t feel like I was involved in the winning process, the winners had nothing to do with me, it was the coin flip that decided the direction and the market just moved it to the TP level.
Me: Congratulations, you’re now starting to think like a professional trader
Friend: Is that it??? Is this what you do on a daily basis???
Me: Yeah, when I finally “got it” this was how I was making money short term trading before I developed my current process.
Friend: So, I just need to constantly be on the lookout to cut losers, day in, day out, all day, everyday???
Me: Well at the beginning yeah, the better you get at it the more profitable you will be. You can be profitable just playing this side of cutting losers and letting the markets take care of your winners. There’s a 1000 different ways to manage losing trades. When you’ve mastered the losing side then you can start looking for ways to squeeze more out your winners or go on to develop your own system that suits you.
Friend: This sucks bro, it’s not fun at all! There was no effort, no thinking, no analyzing, no thrill from being right and winning!
Me: Lol! Yeah, profitable trading isn’t supposed to be fun, remember how pro traders don’t get euphoric over winners nor get depressed over losers.
Friend: Yeah, but I didn’t expect it to be THIS freaking boring!!
Me: Lol! Yeah, you’ll see that pro traders actually get their fun from adhering to and improving the process they designed around their personalities, they know that the profits will take care of themselves.
Friend: Dude, if that’s your idea of fun, you need to seriously get a life! Lol!
3 months later……
Me: So how’s the trading going?
Friend: Yeah, I tried several different daytrading and swing trading systems. They were all pretty profitable, but it was extremely boring and not what I was expecting! Just got tired of sitting in front of the screen monitoring losing positions. Not for me, so I switched to more passive investing to reduce the screen time!
It was a very interesting conversation! 
And loved how you sort of guided your friend to the answer you were looking for so they can make realizations on their own also. 
I think it would be interesting if you make this a series and share other conversations also (with their consent of course)! 
