How long will it take to be one of the 5% of traders who make money?

traders who make money

There is only one definitive answer to this question: it depends. However, there is a minimum length of time. A new trader shouldn’t expect to make a good profit until about 18 months of trading.

How long profitable trading will take depends on many factors, including uncontrollable ones like the state of the market. However, there are some characteristics successful traders have, which can help make you more successful faster.

The 5 most important characteristics of a successful trader include:

  • Discipline: In order to learn the market, it is essential to stick with learning all of the provided resources. Have confidence in your own abilities, while maintaining an open mind and set strict stop losses to cap the amount that you can lose. Otherwise, you will be more at risk for potentially blowing up an account. It is the most fundamental skill for new traders to learn, as it is absolutely essential that beginners avoid becoming attached to their assets and lose the capability to objectively trade them.
  • Patience: Becoming a successful trader is not something that occurs overnight. One needs to be able to take time to learn from mistakes and refine the strategies she takes. If you want to be more than a gambler, you must invest your money as well as your patience into becoming a successful trader, and be in the game for the long haul.
  • Adaptability: The traders that typically fail are those who are afraid to cut their losses or switch their strategies. If something is not working with your strategies, you must be willing to adjust and pivot, regardless of what you put into it. The market changes every 3-6 months, and the best of the best are constantly preparing for the new adaptations.
  • Mental Toughness: You need to be able to accept that both losses and profits are a part of regular life. The important thing is to be an effective loser, only risking small amounts of money for high potential gains. Even if you are confident in your strategies, be willing to accept that no trader wins on every trade, and compensate for the losses by achieving monumental gains on your winners.
  • Forward Thinking: Having an edge is the differentiating factor for achieving success in the competitive trading markets. The capability to think about concerns and changes before they happen is a 2nd order level of thinking and if a trader believes something an hour, day, week, etc. before everyone else, there is a pocket of time that allows them to react directly on it and avoid heavy losses or enact substantial gains.

Trading effectively in any market is no easy feat, whether that is in the forex, futures, options, the stock market, or any other. There is no blanket answer to describe the timeline for a trader to be profitable, but there is a reason why only about 5% of traders actually make money. 

Research and learning

The first step to making it into this small group is to be very well educated in the field that you are going to trade in. While those who study finance or a related subject as formal education may have a good foundation, there are many people who work professional day jobs like doctors, lawyers, engineers, etc. who are extremely successful in the markets. The advent of modern education resources allows for even the busiest individuals to learn new skills at their own pace. Work commitments, family matters, and emergencies are not a hindrance to progressing through online courses, reading books, or other programs.

Testing your strategy

After doing sufficient preparation and developing your strategies, it is best to run them through a demo program. This will give you a sense of what is going well and what needs improvement, before investing your real money. Most experienced traders actually suggest benefits are reaped from early losses, as it allows new traders to be comfortable with the stresses and mechanisms or trading. Those who make an immediate profit have a tendency to become over-confident in their ability to make money, and underestimate the difficulties of the market. 

Patience is key

Sometimes, traders will blow up an account, losing all the money they put in and quit trading afterward. However, learning from your mistakes and persistence have led many to become extremely profitable in the long run.

Typically, one can expect the learning curve to take, at the least, a few months. During this time, you should not be frustrated with substantial wins or losses as you will still be developing your approach to trading. Many people end up finding a niche that they can ride with for years. 

It is always the traders who are not willing to learn from their mistakes and maintain patience who begin trading, lose their money, and then exit. There are an abundant amount of resources available now that allow you to learn and trade successfully!

 

A bit about BetterTrader regarding the markets in this article:

Platforms such as Better Trader have improved the ability for anyone to trade. AI generated opportunities allow ordinary people to be successful in the markets. BetterTrader produces insights deduced from real-time news, events, and analysis. These insights are displayed in a variety of ways, including from emails, push notifications, the BetterTrader website, and Twitter.