1) capital, as has been said. even with remarkable returns (and generally more risk) unless you have 100k to trade with bare minimum (and even with that much, you'll need a night job), you will not be able to support yourself, let alone a wife or family. 250k is a good cutoff that others have stated, if one has to support a family.
1a) budgeting. like above, even with 250k, even if you are diligent in your trading and make 100% returns a year. you can't live that extravagant, and you need to budget if you have kids, wife, etc. money goes quick. your budget needs to take into the fact that ideally your account should be outperforming the market AFTER EXPENSES =or= growing faster than your opportunity cost (what you give up in salary each year by trading.
when you think of buy&hold and opportunity cost in this way, it makes no sense to devote your 100k savings to trading and quit your day job that pays a measly 40k, even if your spendings each year are capped somehow at 35k, and you make 40% gains every year. sure your account will grow and you will make money, but the risk you are taking needs to be a factor as well ....
1b) risk, realize that even the best blow up their accounts, or get greedy and go madoff on the markets, it happens and it happens without knowing it, nobody ever expects it, and nobody ever expects it when a single trade goes against them because otherwise they shouldnt have placed that trade.
using the above example, let's say that after expenses your 100k account increases by 5k each year...thats a 5% return compounded annually after expenses. wouldn't it make more sense to put your money in a fund, and go back to your day job? also consider the fact that there is a very significant 1-5% chance (or more) that you LOSE IT ALL
so let's compare
assuming 40k of expenses per year (not very generous)
choice 1: invest your 100k at 6%, take your 40k day job, break even every year
choice 2: trade your 100k, make a solid return of 45%, leaving 5% after expenses to build your account ever year. factoring in a 1-5% chance that you could very will lose it all or lose money and have to go back to your job ( that you may not be able to get )
as you can see, that with this amount of capital, even if the buy&hold market is performing weak (6%) and your gains are quite impressive for a new trader (45% year after year) you'll notice that it's just not worth it, not worth the risk, not worth the work, not worth whatever.
100k is just barely enough unless your returns are incredibly outsized, 200k is more like it, but again, do you really want to trade 200k the way you would trade 100k?
2) plan/discipline/focus/humility
most people have no trading plan, they have not backtested, they have not got anything new to bring to the market. the market is famous for whipsawing people out of their money. when you have no edge, when you cannot say that you are confident that you can beat the market you will lose to the market you will be scared. the people who do get this confidence get greedy and lose anyways. as a trader you need to walk the fine line between fear and greed. in the markets that is called humility, and most people don't get a good enough balance of fear and greed until they have wiped out an account or two....it's just how it goes...
most traders do stupid things, they get influenced easily. even if they have a plan, they see a cool setup and want to trade it and theyll lose big, or they'll trade after hours or they'll trade a product they aren't familiar with and lose big due to different contract leverage that they weren't aware of. most people are not willing to do research, they couldn't forecast the market if you asked them to. the top traders and institutions and funds make money while retail players lose it because of 2 things 1) information and 2) they have a plan. most traders treat trading like surfing, just grabbing onto the waves and hoping to get lucky, sure this does work but it's way more helpful if you have information, and if you have an idea about the markets.
3) dedication
its like online poker, really. how many people claim they make good money at online poker. EVERYONE. how many people do you actually know that make bank playing poker. I'd say probably 1% of the people I know that claim they make money. So 99% of people have to lose or not be dedicated in order for that 1% of people with the talent and dedication to win big and make it a dream. that's the way trading is. most people aren't dedicated. they don't have the time, the capital, the interest, the knowledge, the education, the resources, or whatever. if you are really dedicated to making money at poker or trading, it's actually not that hard to do.....it takes some studying, discipline, smarts, etc etc etc....but to make a living of it....that takes capital.....which brings us back to point #1.
1a) budgeting. like above, even with 250k, even if you are diligent in your trading and make 100% returns a year. you can't live that extravagant, and you need to budget if you have kids, wife, etc. money goes quick. your budget needs to take into the fact that ideally your account should be outperforming the market AFTER EXPENSES =or= growing faster than your opportunity cost (what you give up in salary each year by trading.
when you think of buy&hold and opportunity cost in this way, it makes no sense to devote your 100k savings to trading and quit your day job that pays a measly 40k, even if your spendings each year are capped somehow at 35k, and you make 40% gains every year. sure your account will grow and you will make money, but the risk you are taking needs to be a factor as well ....
1b) risk, realize that even the best blow up their accounts, or get greedy and go madoff on the markets, it happens and it happens without knowing it, nobody ever expects it, and nobody ever expects it when a single trade goes against them because otherwise they shouldnt have placed that trade.
using the above example, let's say that after expenses your 100k account increases by 5k each year...thats a 5% return compounded annually after expenses. wouldn't it make more sense to put your money in a fund, and go back to your day job? also consider the fact that there is a very significant 1-5% chance (or more) that you LOSE IT ALL
so let's compare
assuming 40k of expenses per year (not very generous)
choice 1: invest your 100k at 6%, take your 40k day job, break even every year
choice 2: trade your 100k, make a solid return of 45%, leaving 5% after expenses to build your account ever year. factoring in a 1-5% chance that you could very will lose it all or lose money and have to go back to your job ( that you may not be able to get )
as you can see, that with this amount of capital, even if the buy&hold market is performing weak (6%) and your gains are quite impressive for a new trader (45% year after year) you'll notice that it's just not worth it, not worth the risk, not worth the work, not worth whatever.
100k is just barely enough unless your returns are incredibly outsized, 200k is more like it, but again, do you really want to trade 200k the way you would trade 100k?
2) plan/discipline/focus/humility
most people have no trading plan, they have not backtested, they have not got anything new to bring to the market. the market is famous for whipsawing people out of their money. when you have no edge, when you cannot say that you are confident that you can beat the market you will lose to the market you will be scared. the people who do get this confidence get greedy and lose anyways. as a trader you need to walk the fine line between fear and greed. in the markets that is called humility, and most people don't get a good enough balance of fear and greed until they have wiped out an account or two....it's just how it goes...
most traders do stupid things, they get influenced easily. even if they have a plan, they see a cool setup and want to trade it and theyll lose big, or they'll trade after hours or they'll trade a product they aren't familiar with and lose big due to different contract leverage that they weren't aware of. most people are not willing to do research, they couldn't forecast the market if you asked them to. the top traders and institutions and funds make money while retail players lose it because of 2 things 1) information and 2) they have a plan. most traders treat trading like surfing, just grabbing onto the waves and hoping to get lucky, sure this does work but it's way more helpful if you have information, and if you have an idea about the markets.
3) dedication
its like online poker, really. how many people claim they make good money at online poker. EVERYONE. how many people do you actually know that make bank playing poker. I'd say probably 1% of the people I know that claim they make money. So 99% of people have to lose or not be dedicated in order for that 1% of people with the talent and dedication to win big and make it a dream. that's the way trading is. most people aren't dedicated. they don't have the time, the capital, the interest, the knowledge, the education, the resources, or whatever. if you are really dedicated to making money at poker or trading, it's actually not that hard to do.....it takes some studying, discipline, smarts, etc etc etc....but to make a living of it....that takes capital.....which brings us back to point #1.