How Long Until I’m A Profitable Trader?
Being a profitable trader is of course great, but the journey to becoming consistently profitable can take quite some time. If you are just getting into world of trading, you might be wondering how long it will take you to become a profitable trader.
Some people will tell you that you can become consistently profitable in 10 years, some say 5 years, some say 2 years, some say 1, and some say it is possible to do so within months. Folks, we cannot tell you exactly how long it will take.
This is because every person is different, and your journey may take you on a much shorter or longer path than other traders have to venture. However, what we can tell you is that there are 4 stages that you will pass through until you become a consistently profitable trader. Yet, how long you spend in each of these stages is totally up to you.
The Stages of Becoming a Profitable Trader
As we mentioned above, there are four stages that you will have to go through until you get to the stage where you are a consistently profitable trader. These stages are as follows.
- The Greenhorn
- The Risk Manager
- The Edger
- The Semi-Pro
Stage 1: The Greenhorn
The first stage you will pass through on your journey to becoming a profitable trader is the greenhorn stage, or in other words, this is where you are a super newbie. This is when you first start, and this is where life is full of hopes and dreams, where you see countless trading possibilities. You expect trading to be your solution to all of your money woes.
At this point, you have probably studied all sorts of indicators, charts, strategies and more. This is the stage where you probably feel super confident. You think, “hey, this can’t be so hard!”. Heck, you might even win a few trades, then, boom, you hit a loss, and another, and before you know it, you’ve blown your account.
Something to keep in mind here, if you plan on ever moving out of this stage, is to remember that trading is not a get rich quick scheme. The odds are against you, and if you expect to become a profitable trader, you will need to keep at it. This stage is all about learning and practicing.
Stage 2: The Risk Manager
The second stage on the journey to becoming a consistently profitable trader is the risk manager stage. In stage 1, you probably didn’t do a good job of risk management, but as your losses built up, you should have learned some good risk management techniques.
By now, you should understand the importance of risk management and how it can prevent you from suffering excessive losses. You should at this point be familiar with the 1% risk rule, risk to reward ratios, how to calculate position size, and more.
At this point, if you follow your risk management rules, you should be able to away with massive losses and blown accounts. Here, you keep practicing all of the best risk management techniques, but somehow you’re not a consistently profitable trader yet.
Sure, you might not be losing many trades anymore, but the winners still don’t make up for the losers. In order to move onto the next stage, you need to master concepts such as stop loss distance, your account balance, and the % of money you risk on trades.
Stage 3: The Edger
Alright, so your path to becoming a consistently profitable trader has landed you in stage 3, the edger, and by this we mean that now you are looking to find an edge in the market, an edge that will allow you to win trades consistently.
Sure, risk management, strategies, and indicators are great, but by now you have probably realized that these things alone are not enough to make you a consistently profitable trader. Here, it’s time for you to find an edge.
For those of you who don’t know, an edge is something you repeat over and over again because it is producing good results. This is all about finding the right way to trade, mainly mastering a few strategies that provide you with consistent results. Here, you need to get rid of the 95% of stuff that doesn’t matter. Anything that hasn’t produced results so far needs to be left alone.
Take the 5% or 10% of information that you have, the stuff that has managed to yield good results, and go from there. Use historical data, keep trying, and validate your strategies. Once you have found a strategy that has provided good results time and time again, you’ve found your edge.
Stage 4: The Semi-Pro
At this point, you are more or less a consistently profitable trader, but of course, there are still some occasional hiccups. Now, don’t worry, because at this point, you are doing better than 95% of traders out there, and you are very close to being consistently profitable.
At this point, in order to become a consistently profitable trader, you need to start using multiple trading strategies, or in other words, you need to develop multiple edges over the market. This is because no single trading strategy will be profitable forever. It’s like the stock market and portfolio diversification. You want to have multiple revenue streams.
Moreover, realize that no single broker is totally safe, so spreading your money across multiple brokers will help manage risk even more. Something else to remember here is that you are always a student, and always will be. If you expect to be a profitable trader for a long time, you need to keep learning, you need to keep tweaking your strategies, and you need to keep evolving.
Becoming a Profitable Trader – Final Thoughts
The bottom line is that once you make it through those 4 stages, you should by all means be a consistently profitable trader. That said, remember that there is always room for improvement! If you are an aspiring trader, but you keep failing, check out our article on the mistakes that lead to failure.