What’s the path of newbie trader?
A great analogy is the Chinese bamboo tree, which takes years to start growing and show a sprout—then, within weeks, it can grow as tall as a 7-floor building. This principle applies to your trading journey:
- Lose
- Lose less
- Flat – this is great achievement! Remember, when you are net flat it means you already can cover your commissions – that makes you a competent trader!
- Slightly positive
- Understand what types of trades make you profitable. Spot and study more of them, and build a playbook of trades that make the most sense to you
- Get bigger in the trades that make the most sense to you
So don’t be too focused on your PnL (profits and losses), but rather be obsessed about building a solid trading base:
- Study technical analysis
- Learn market structure and patterns
- Study news catalysts and reactions to them
- Understand trading psychology
- Build right routines through the day
How long does it take to become a consistently profitable trader?
People are not created equal so nobody gooing to tell you concrete time right but it really depends on several variables:
- How much time do you dedicate to the markets? Everyone know the rule of 10000 hours, so if you dedicate 3 hours per day, it’ll take 10000/3/365 = 9 years to achieve 10000h. If you dedicate 9 hours per day that will take 3 years.
- Does your market allow you to spot many trading setups and patterns? Consider this – trading is a pattern recognition skill, brain is pattern recognition super machine, most discoveries come from noticing repeatable elements, coming up with a thesis for that, and checking this thesis through statistics. Try to expose yourself to patterns and feed your brain with data. Also, more real-time practice improves execution skills.
- How do you structure your training process? It’s not very effective just to trade. Trading is a peak performance activity, and like any other top-performing athlete, you should spend more time training than performing. Pro chess/football/Quake/piano players spend more time in practice than in actual performance. You could spend 9 hours a day trading and still struggle if your training process isn’t effective. A good training process lets you observe market patterns and your behavior patterns, helping you grow faster. Keeping records of your activity is crucial.
- Do you build your progress from your strengths? This is vital. You need to understand your strengths and build your best trading approach from there. Some people can make over 50 trades a day without fatigue or emotional impact and don’t even read news on their trading instruments; others may be exhausted after 10 trades and prefer waiting for the best 2 trades of the day. Some aren’t suited to intraday trading at all because it’s too fast for them. Some people excel at scripting or programming (and can create helpful tools), others at patience (taking only the best setups and skipping the rest), and others at arithmetic (quickly and accurately estimating risk). Everyone has 1-2 strong points and countless weaknesses because every person is better at some task than others. You can’t manage countless weaknesses, so focus on enhancing your strengths to cover your weaknesses.
Considering these factors, an average retail trader without a professionally designed training process might take 4-12 years to become competent trader. However, if you are lucky to find a quality trading education, that timeframe could be reduced to 2-6 years. Warren Buffett, for example, took about ten years of intense study and practical experience before he felt ready to start his own fund.
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