You’re getting frustrated with your trading. I get it. Reality is setting in. It’s not as easy as you initially thought. You’re wondering, “How long is this going to take to become a profitable trader?”… Well, you probably are not going to like my answer, but you may find it to be useful. Hopefully, this article will give you a glimpse of the light at the end of the tunnel.
If I told you it would take you, specifically, 30 days to become a profitable trader, I wouldn’t be telling you the truth. If I told you it would take you 90 days, 6 months, or 5 years to become a profitable trader, I’d also wouldn’t be telling you the truth.
The truth is it really depends.
It depends on your temperament, your level of self-awareness, your commitment to learning, your commitment to going through the emotional rollercoaster, and plenty more. I will tell you though, with a decent amount of certainty, that you do not need to be a rocket scientist, mathematician, or have an IQ of 160 to become a successful and profitable trader.
What it ultimately comes down to is your ability to identify your good habits and bad habits. Once you’ve accumulated and segregated your habits through practice, live trading, time, and experience you’ll have enough data to show you what’s working and what’s not working.
Focus On Eliminating What’s Not Working
I love this quote by Pete Seeger, “Any damn fool can make something complex; it takes genius to make something simple”. What I’m about to talk about is so damn simple, yet so hard to accomplish. However, it truly is the difference between being profitable and being unprofitable.
We all have a collection of habits when we trade. Some are good, and some are bad. The good habits lead us to make money, while the bad habits sabotage any gains and progress that we work so hard to achieve.
If you would take the time to sit and reflect on what is working and, more importantly, what is not working in your trading (and life for that matter), you would find that the winners would take care of themselves.
Remember that capital preservation is the most important thing to master. If you run out of capital, you can’t play the game anymore and you can’t use your money to make money. By focusing on making trades where you know that the odds are stacked in your favor, rather than taking any random trade, you can increase your odds of becoming a profitable trader.
If there was 3 good things that you do (habits, trade setups, whatever you want to call them) that cause you to make 3 good trades that net you $100 on each trade, and 5 bad things you did that caused you to take 5 losing trades that cost you $100 each trade, wouldn’t it be worth your time to identify a few of those bad habits and work towards eliminating them? If you eliminated 3 of those 5 bad habits, you would be profitable. Start with working on eliminating 1, then another and then another.
If you’re stuck wondering what you’re doing wrong, and what you’re doing right, skim through this article on the top trading mistakes. It should help you realize some terrible mistakes that you might be making.
Everyone’s profitable at some point. You just need to tip the balance and have your winners be larger than your losers. It’s the truth. There is no magic pill, except for maybe this.
I told you. It’s simple, but it isn’t easy.
How Much Time Are You Committing?
As I said, there’s no definite answer to how much time it’s going to take to become consistently profitable. It’s not like college where you know that if you pass the tests, you’ll graduate with your degree in 8 semesters. Welcome to the real world where things aren’t that certain and simple.
However, here’s 1 thing I do know with certainty. The more time you commit to something, usually the faster you will see results. Michael Jordan practiced (hundreds of) thousands of free throws to get to the level he achieved. Tiger Woods spent endless hours playing golf, which in turn allowed him to rise to the level of mastery that he did.
The unfortunate thing about trading is that we don’t have the opportunity to practice in a sandbox environment. There’s no place to shoot free throws, or practice your swing. Sure, there’s trading simulators, but those don’t actually simulate what it’s like to trade live positions.
How do you get around that, without risking any real money? You’re guess is as good as mine. What I do know is that constant exposure is better than no exposure, or slight exposure. If you’re most comfortable trading on a simulator, do that until you’ve built up some confidence and consistent (simulated) profits.
If you’re account permits you to take very small positions, it may benefit you to forego the simulator and trade live with smaller positions. Positions that are so small, it wouldn’t bother you if you lost money.
Don’t expect to become a profitable trader though if you’re only spending 1 hour a day looking at the market. Prepare to spend the full day (day after day) watching the market to get a feel for it. It just takes time.
Gladwell’s 10,000 Hour Rule (Of Thumb)
There’s many critics of Gladwell’s 10,000 hour rule. To me, it’s just a hyperbole that expresses the need for you to spend a lot of time at something to get truly great. The rule is based around what it takes to become a so-called “outlier”, someone who is in the top 1-5% of their field.
Coincidentally, only about 6% of people who try trading go on to become consistently profitable. There’s a number of reasons that’s the case. Part of it is that those 6% are truly committed to making a business out of this, and don’t view the market as a slot machine.
They also spend massive amounts of time watching the market, reflecting on it and themselves, and treating this as a business. It isn’t easy, and won’t happen overnight. But, wouldn’t you say the rewards are worth it?
You’re Going To Fail (Probably A Few Times)
That’s just a part of life. You’re going to fail. Then you’re probably going to fail again, and again. The trick is to fail well, to learn from your mistakes. Look, I completely understand where you’re coming from, and how frustrating it is. So, to provide you with some motivation, here’s some quotes on failure:
“Failure isn’t fatal, but failure to change might be” – Jack Wooden
“Failing is not falling down, but refusing to get up” – Chinese Proverb
“Most great people have attained their greatest success just one step beyond their greatest failure” – Napoleon Hill
Get Back Up
Actually speaking of Napoleon Hill (author of Think and Grow Rich), he had a very interesting story about a man named R.U. Darby. It’s one of my favorite stories on why you shouldn’t give up on your commitments, even when you haven’t gotten what you’re after yet.
And by the way, you might have some preconceived notions about Think and Grow Rich. While I don’t believe in the hocus pocus idea that you can sit in a room, think about what you want, and manifest it into the existence, I do believe that your attitude about things can have a very large impact on your success in anything.
P.S. I don’t know who the guy in the video is. I think he’s trying to sell a book called “3 Feet From Gold”. Just watch it up to about the 2 minute mark, and ignore the rest. You’ll get the point of the story.
Ask Yourself, “Am I Gambling or Trading?”
I alluded to this earlier, but ask seriously… are you gambling or trading? Here’s an article on the differences between trading and gambling. The line can get very blurry and very thin, if you aren’t careful.
If you’re blindly throwing money at the market, making trades for no reason, or expecting to double your account in a week, you’re probably gambling and should stop trading before you destroy your account.
Stop Floundering– Do This.
One last thing, before I end this. I hope you’ve been finding it useful so far. For those of you who are struggling, and haven’t had much good guidance on trading, I’d recommend you give this a shot. It’s one of our courses here. Learning about Options can be a great way to better every aspect of your trading, because it helps you deal in probabilities.
Having a probabilistic mindset is one of the biggest keys to trading success. There is no such thing as predicting the market. You can only assess the odds of what may or may not happen, and then play it accordingly. Knowing Options can help you do that in a clearer and more defined way. Actually, we also have a free course for those of you who would like to know more about Options in general.
Either way, I hope this article was helpful in more ways than one to you. If it was, feel free to leave us a comment below and show your support. Thanks!