I get this question all the time and it is a good question. People these days don’t have the time to invest years in this business unless it proves to be financially rewarding along the way. There are so many educators and so much information available today, yet it doesn’t seem to change the well known failure rate. So what does it take to get good? And how long?
To begin to answer this question, we first have to define what “good” is. In my opinion, a good trader is someone who can grow their account consistently. It is not necessarily about making lots of pips or getting outsized returns like 50% per month. People who are looking for the big score are in the wrong business. This is not supposed to be exciting. If you want to make a few thousand a day, you have to have enough capital to justify the risks you will have to take. Otherwise you are gambling.
So now that we have an idea of what “good” is, we can consider what it takes to get there and how long. In my opinion, being good enough to compete really depends on one factor:
How well you know your setup. I can show you one of the patterns that we use in our methodology. I can explain to you the basics of how it works and how to use it. Will you be able to make money with this much information? No. The reason? You do not know how to consider it within the context of current market conditions.
Knowing your setup goes way beyond looking at a chart with some indicators on it. It’s about considering your setup in light of your current market conditions. In other words it’s about how well you know your setup within the context of the situation.
For example, when you see a technical setup developing, do you ask yourself questions like:
Is the setup forming within significant support or resistance area? What is the condition of the S&P at the moment? What are other correlated currencies doing at the moment? Is there any significant news affecting the markets? Etc. If this is not handled in a structured way, your results will be random.
When you have the ability to weigh all of these variables quickly, you have reached a skill level that should serve you well. Most educators know that you are looking for a “system” or some automatic way to bypass the analytical process behind trading decisions. So they sell this convenience in neatly arranged packages and provide some support. To get “good” at this, you need guidance, regular evaluation and repetition for a significant amount of time. And this is precisely why we created the Active Trader program which provides our traders with a rigorous training routine for 10 months.
So it takes 10 months? You need to understand that it will be different for everyone since people enter with a different amount of experience. I can tell you that without a structured framework and regular performance evaluation, it can take years. With quality training, from what I have seen, it can take anywhere from 6 – 9 months assuming you have an open mind and some basic experience.
Becoming a good trader requires the development of thinking skills which are not easily learned from watching numbers flicker all day. Don’t be fooled into thinking this is easy or that some automated program purchased for a hundred dollars is going to solve your problems. If you really want to get into this business, make it easier on yourself and find an educator who is willing to spend the time necessary to help you develop the proper mindset. A good framework should provide a process for structured decision making, rigorous evaluation and enough flexibility to consider a range of conditions.
I would love to hear your thoughts on the subject. What do you think it takes to become a skilled trader?
Marc Principato, CMT
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