How Long Does It Take to Become a Profitable Trader?

[MightyMouse 12]

Incidentally, I began this by questioning what is meant by trading "profitably" and trying to distinguish between trading above zero and and earning a living trading which are both forms of profitable trading, but vastly different in capital needs, mental prep, etc. It quickly got lost in some sort of numbers game.

[1320trader 10]

To become an engineer takes between 3 and 4 years (3.5 years x 8 hours/day x 5 days/week x 40 weeks/year = 5600 hours) and then probably 1 - 2 years of practical experience untill you can manage a project alone (2 years x 8 hours/day x 5 days/week x 50 weeks/year = 4000 hours) so we are back to about 10,000 hours (and that was without overtime )

Asuming one devotes themselves completely to trading, 8 hours/day x 5 days/week x 50 weeks/year = 2000 hours ==>> 5 years.

And don't forget that in college you have teachers that guide you, mostly, in the right direction, whereas in trading we listed to all kinds of advise (sometimes given by people who should not have opened their mouth or sat in front of a keyboard to give their "advice/knowledge".

Other professions might take much more some, less but not too many.

I remember that a plumber in Montreal told me that he had to apprentice for 8000 hours (8k), on top of studiying, to get a liecense to be a master plumber.

To be a liecensed electrician, if one has a degree in electrical engineering, one had to be an apprentice for 6000 hours (6K).

It seems to me that those who truely want to be traders as a profession should count on 5 years if they cannot find someone to mentor them and shave off a few years off the journey.

 

 

 

I personally don't believe trading can be compared to any of these professions.....or pretty much any profession for that matter. They all work under some sort of structure. There are laws for electricity, the human body is the human body, water and crap go down hill, etc. In these environments you solve a problem with static numbers. Trading is much too dynamic to put static numbers to it. The market is new every second, something not seen before. In trading everything works and nothing works.

 

 

Here is a good quote from Livermore.....

 

"Rarely do any of us grow up learning how to operate in an arena that allows for complete

freedom of creative expression, with no external structure to restrict it in any way. In the

trading environment, you will have to make up your own rules and then have the discipline

to abide by them.

 

The problem is, price movement is fluid, always in motion, quite unlike the highly

structured events that most of us are accustomed to. In the market environment, the

decisions that confront you are as endless as the price movements you intend to take

advantage of. You don't just have to decide to participate, you also have to decide when to

enter, how long to stay in, and under what conditions to get out.

 

There is no beginning, middle, or end - only what you create in your own mind."

Edited August 4, 2009 by 1320trader

[Tams 20]

If I say that there are "Laws" governing price behavior,

much like laws governing physics,

some would laugh at me...

 

 

This is a multi-dimensional World.

 

 

 

.

Edited August 4, 2009 by Tams

[Gabe2004 10]

In reply to some of the above posts, whould one compare trading to an exact science like job like engineering or to painting, or brain surgery, or law.

All the above require years of practice and a curve ball could be thrown in at any time.

Some here talk about the low percentage of successful trades.

How many successful people are there in any profession?

How many restaurants still exsist after 2-5 years of operation?

How many jobs for that matter, does the average person have in their life time?

In the statistics about trading success we never hear about how much time did one put in untill he/she were a decided success or failure.

I would venture out and say that most of the failures were in this business for a very short time and even during that time they did not completely immerse themselves at acomplishing what they started out to do, and, they were undercapitalized with unrealistics hopes and dreams about how much money they will make with total disregard to their capital. (Some hope to make tenth of thousands of dollars a year from trading while having an acount of only a few hundred dollars. That is not realistic and shows that they are not serious about turning trading into a business but are more like glorified gamblers.

The bottom line is, if one wants to succeed in trading or any other venture in life, one has to give all they got without excuses and commit themselves to the cause for a realistic period of time before expecting results.

[sevensa 10]

If you are averaging more than 15 dollars or so a day, per contract traded and are day trading, and you have been trading more than a few months, you are much better trader than most traders. I tip my hat to you.

 

In determining your averages make sure you include all winners and all losers and also make sure they are real trades and not sim.

 

Out of curiosity, what IYO is a good amount to expect to earn on average per contract traded?

 

I don't trade the ES and I don't know if your question is per trade or per day as it seems you consider average ticks per trade and average ticks per day to be the same.

 

To be honest, I am getting a little bit lost of your line of reasoning. Initially I thought you were talking about ticks per contract per day, then you change that to ticks per contract per trade and now it seems like you are merely comparing 1 tick profit to all "traders", including losing ones. That was not evident from your post where you stated that you need 30 to 40 contracts to make $450 a day. Sure, if you make 1 tick, you are much better off than the people losing money. If I dig trenches for 15$ a day, I make more money than someone who is unemployed and earns nothing, but I would seriously wonder if this is worth the effort and if maybe I can utilize my time better. But that is just me. For other people this could be perfectly acceptable.

 

However, with the NQ I know that 1.5 points (6 Ticks; $30) average TRADE (not per day) per contract is realistic and very achievable and probably on the low end than what many others do. Whether this is a "good" amount, I don't know. Some people would think it is and some people would consider this a waste of time as well. For each their own.

 

Blowfish's reply got lost between all the posts which is unfortunate as he is pointing out a very important principle.

 

Btw, thanks for the tip on how to calculate averages. Who would have thought that one need to include all trades to calculate an average.

[BlowFish 10]

Incidentally, I began this by questioning what is meant by trading "profitably" and trying to distinguish between trading above zero and and earning a living trading which are both forms of profitable trading, but vastly different in capital needs, mental prep, etc. It quickly got lost in some sort of numbers game.

 

Actually with proper position sizing it does not matter. The wonder of compound growth. The issue is actually that some marginal traders think they are profitable. The 'numbers game' is trivially simple, it is also vital. Of course many people would rather not look at the numbers as it would bring their reality crushing down. Of course it comes tumbling down anyway eventually .

 

Take a look at Thalestraders postings on behalf of his 9 year daughter. From micro lot to full mini already with conservative MM. Funnily enough her dad was suggesting more aggressively increasing position size at one point.

[BlowFish 10]

Since 95% of the people in the market lose money the real answer is never.

The 5%, i would really like to know who they are. I have not seen one thread or post on any of these forums that is going to lead some one to be a successful trader. They all say the same thing, have a plan (don't tell you what it is) money management and all the other stuff that has been mentioned a 1000 times. All the books recommended etc are not going to help people starting form scratch because after the finish the first or second book their head will be spinning.

Does anyone think anyone making real money is on any of these boards.

I think people trade because of the hope of making money and they enjoy it like golf.

Anyway stop picking on the newbies. How do i start is a legitimated question. But you might as well be asking how do i walk on water and have sex at the same time.

 

I have to say I think your are pretty much wrong on each point here sorry I have met and corresponded with several of the guys who post and have little doubt that some are in the positive%. Do you believe people stop posting when they become profitable? Why would the demographic be any different amongst posters as traders as a whole?

 

Take a look at the trading with market statistics threads that is something I can assure you is possible to trade profitably based entirely on the information presented there. It is also pretty unique as far as I know.

 

If it is your sincere belief (which I have to say is contrary to my own experience) that only losers frequent forums then why would you spend any time here at all except as a social thing? I can't see how it is productive if you hold those beliefs.

[MightyMouse 12]

I don't trade the ES and I don't know if your question is per trade or per day as it seems you consider average ticks per trade and average ticks per day to be the same.

 

To be honest, I am getting a little bit lost of your line of reasoning. Initially I thought you were talking about ticks per contract per day, then you change that to ticks per contract per trade and now it seems like you are merely comparing 1 tick profit to all "traders", including losing ones. That was not evident from your post where you stated that you need 30 to 40 contracts to make $450 a day. Sure, if you make 1 tick, you are much better off than the people losing money. If I dig trenches for 15$ a day, I make more money than someone who is unemployed and earns nothing, but I would seriously wonder if this is worth the effort and if maybe I can utilize my time better. But that is just me. For other people this could be perfectly acceptable.

 

However, with the NQ I know that 1.5 points (6 Ticks; $30) average TRADE (not per day) per contract is realistic and very achievable and probably on the low end than what many others do. Whether this is a "good" amount, I don't know. Some people would think it is and some people would consider this a waste of time as well. For each their own.

 

Blowfish's reply got lost between all the posts which is unfortunate as he is pointing out a very important principle.

 

Btw, thanks for the tip on how to calculate averages. Who would have thought that one need to include all trades to calculate an average.

 

6 ticks on nq per trade is fabulous! If you are earning 6 ticks per trade on average all you need to do is devise a plan to add contracts and you'll be on eof the best traders ever.

 

Why? because if you are taking 30 dollars a trade and you do only 2 trades a day that means that in a month you will have made about $1200 trading nq.

 

NQ has a contract value of around $32000, so at 1200 a month and 14,400 a year, you are earning somewhere around 40-50% of the NQ contract value. If you in fact only trade 1 contract a day in NQ, your return will be half of that at like 20%. That puts you in probably 1% of all traders. So it's not a low amount at all. Traders at major Wall St firms who are given $25,000,000 to trade and have 300 person research departments at their disposal have 10% as a goal for the year. I think it's delusional to expect to earn more than 10% from the markets consistanly especially as an underfunded independant trader trading on a home PC.

 

I really don't know if you are comfusing target amount per trade with avg per trade or something. I suspect that a lot of you guys have bought into the BS of how much money you can make trading and are rejecting the reality of what a trading account tells you at the end of the month.

 

Ever wonder why the "great" traders on here do not want to share their actual results? They may post a winning trade here and there to keep up the illusion of greatness, but the illusion fades when you get to the hard reality of it.

 

I hope no one targets 1 tick per trade or 6 ticks in NQ. Commissions would eat you alive.

 

I am fortunate in the sense that I have the time and capital to see this through and I am not implying whatsoever that I am making a living trading. Most don't have the luxury of both time and capital and you need both.

 

If you or someone thinks what I have described is a waste of time and not worth the effort to trade and it prevents them from committing their limited time and capital to the markets, then I feel that I have done a solid favor for at least one person on this forum.

 

My comment on including all trades in an average is because I have heard all sorts of numbers and averages and people tend to want to be "the better trader than you" and tell you their average winner. Or, they give you some back tested result as their numbers. Whatever it is, none of it is as real as the account balance at the end of the month of a real trading account.

[RM686 10]

I have to say I think your are pretty much wrong on each point here sorry I have met and corresponded with several of the guys who post and have little doubt that some are in the positive%. Do you believe people stop posting when they become profitable? Why would the demographic be any different amongst posters as traders as a whole?

 

Take a look at the trading with market statistics threads that is something I can assure you is possible to trade profitably based entirely on the information presented there. It is also pretty unique as far as I know.

 

If it is your sincere belief (which I have to say is contrary to my own experience) that only losers frequent forums then why would you spend any time here at all except as a social thing? I can't see how it is productive if you hold those beliefs.

 

 

Any requests that I have seen for information on trading systems from new members including myself have been meet with the same answer. Develop your own and do you think" anyone who has a successful system is going to post it". I have seen answers to this type of question many, many times including of the other remarks mentioned in my post.

So my post is a composite of the type of responses I and other new members as far as I can tell received.

I also didn't say the people here are losers. Just that the people making the really big bucks are not here.

[Tams 20]

I have seen at least 5 profitable systems/methods posted on the internet... (p.s. or books)

but that does not mean anybody can be a millionaire just by reading the thread.

Trading is much more than that; it is like finding a wife... there are lots of good women out there, LOL... but can you make one your mate?

Edited August 4, 2009 by Tams

[RM686 10]

I have seen at least 5 profitable systems posted on the internet...

but that does not mean anybody can be a millionaire just by reading the thread.

Trading is much more than that; it is like finding a wife... there are lots of good women out there, LOL... but can you make one your mate?

 

Show me 1 for ETFS or STOCKS

[diablo272 10]

Any requests that I have seen for information on trading systems from new members including myself have been meet with the same answer. Develop your own and do you think" anyone who has a successful system is going to post it". I have seen answers to this type of question many, many times including of the other remarks mentioned in my post.

So my post is a composite of the type of responses I and other new members as far as I can tell received.

I also didn't say the people here are losers. Just that the people making the really big bucks are not here.

 

You obviously have not spent very much time here looking through threads then. If you're looking for someone to magically make you a profitable trader, that isn't going to happen. What I have taken from your posts is something like this: "People give me a lot of potentially useful information, but I'm too lazy to put it to use. Tell me how to become successful immediately, or I will continue to complain. By the way, if you post a response to any of my posts with anything other than the holy grail, I will ignore what you have posted and instead simply rephrase my last post in the thread."

 

Honestly there is plenty of useful, practical information on these forums. If you can't take the next step in utilizing it, no one can help you with that even if they wanted to.

 

Edit: Of course, I could very well be wrong about you. And if I am, you should prove it, because I bet you would benefit from it, and I know I would.

Edited August 4, 2009 by diablo272

[Tams 20]

Show me 1 for ETFS or STOCKS

 

 

Show me your desire, sincerity, readiness, willingness to work, perseverance, resourcefulness, creativity, self-motivation, family support, philanthropic participation, community involvements, financial maturity and capital preparation...

and I will show you one.

 

 

 

 

otherwise try G-O-O-G-L-E,

or the search button at the top right corner of this page.

[JBWTrader 10]

Hey RM686

 

thats a lot of experience....you dont meet many like you on such sites...

 

If I dont mind me asking but what style of trading do you use and what changes have you seen over the years in the markets you trade...?

 

All the Best

John

[RM686 10]

Hey RM686

 

thats a lot of experience....you dont meet many like you on such sites...

 

If I dont mind me asking but what style of trading do you use and what changes have you seen over the years in the markets you trade...?

 

All the Best

John

 

Great Question John

When I first stated in wall street, prior to that I worked on the floor of the NYSE as a page, while I went to college at night, I was keeping point and figure charts by hand on graph paper. Standard and poors put out a weekly daily bar chart subscription of about 300 stocks.

Technical analysis was a dirty word. There were no computers or computer programs.

Edwards and Mcgee Technical analysis of Stock market trends originally written in the 1940's was the Bible for Technicians who were considered in the same light as astrologers.

I suggested to Bear Stearns whos capital management department I worked for to start a techinal department as part of their research department and was basically laughed out of the room.

The only Broakeage Department that had a technical analysis department was Harris Upman headed by a guy named alan shaw with an assistant Ralph Accaporia who is still around today. I came to know them and to give you an example of what it was like back then in their office they had a hand made chart of the DOW going back to the 20's going around the 4 walls of a big room. It was updated on a weeky basis by hand.

All the investment firms at the time had to have back up for their picks in managed accounts and therefore fundermental analysis to show the sec and protect themselves from law suites.

In the bear markets of the mid 70's many firm closed or merged and Bear STearns closed its capital management department. This was inpart to the ARISTA legestion passed by the federal goverment due to mismanagement of pension funds. An example was I think it was Ballentine who never properly funded or invested their pension funds and went out of business and people who worked their 30 years wound up with no pension.

The reason I mention this is because it put technical analysis in an even worse light because every one no managing a pension fund had to justfy buys and you need a report thaty recommended the funermentals.

I got laid off with the close of my department and didnt want to become a whore on the retail side. I remember an job interview with a current majore brokerage firm and they asked me if their research department recommended a stock and I didnt agree what would I tell my clients. I said I would tell them not to buy it. The responded "THIS INTERVIEW IS OVER".

To make a long story short I got a job as an investigator for the federal goverment because of my financial background. I continued to trade using hand made charts ans somre services for manny years.

When the computer revolution hit I used stock charts and still do today.

In january of this year I tried my hand at black box trading and lost to date 50% of my money. From when I started the fundermental to technical has done an 180 degree change. My mistake was getting into the computer end where I was way over my head and trying to automate trading with out knowing the programing end.

I can tell you for a fact the markets are minipulated. In the old days techinical analysis worked much better because so few people were looking at charts and you could see it very clearly as opposed to today. Today it is much tougher because everyone is looking at the same thing and in order to have an edge you need to be really good with computers.

Hope this helps and was not to boring.

[JBWTrader 10]

Fascinating stuff mate...

Not boring at all but very very interesting....thanks for sharing that..

 

Yes I agree with you re the programming...I take my hat off to you for going down that route...

 

I really appreciate you taking the time to post this history and personal journey.....great stuff

 

all the Best

John

 

Great Question John

When I first stated in wall street, prior to that I worked on the floor of the NYSE as a page, while I went to college at night, I was keeping point and figure charts by hand on graph paper. Standard and poors put out a weekly daily bar chart subscription of about 300 stocks.

Technical analysis was a dirty word. There were no computers or computer programs.

Edwards and Mcgee Technical analysis of Stock market trends originally written in the 1940's was the Bible for Technicians who were considered in the same light as astrologers.

I suggested to Bear Stearns whos capital management department I worked for to start a techinal department as part of their research department and was basically laughed out of the room.

The only Broakeage Department that had a technical analysis department was Harris Upman headed by a guy named alan shaw with an assistant Ralph Accaporia who is still around today. I came to know them and to give you an example of what it was like back then in their office they had a hand made chart of the DOW going back to the 20's going around the 4 walls of a big room. It was updated on a weeky basis by hand.

All the investment firms at the time had to have back up for their picks in managed accounts and therefore fundermental analysis to show the sec and protect themselves from law suites.

In the bear markets of the mid 70's many firm closed or merged and Bear STearns closed its capital management department. This was inpart to the ARISTA legestion passed by the federal goverment due to mismanagement of pension funds. An example was I think it was Ballentine who never properly funded or invested their pension funds and went out of business and people who worked their 30 years wound up with no pension.

The reason I mention this is because it put technical analysis in an even worse light because every one no managing a pension fund had to justfy buys and you need a report thaty recommended the funermentals.

I got laid off with the close of my department and didnt want to become a whore on the retail side. I remember an job interview with a current majore brokerage firm and they asked me if their research department recommended a stock and I didnt agree what would I tell my clients. I said I would tell them not to buy it. The responded "THIS INTERVIEW IS OVER".

To make a long story short I got a job as an investigator for the federal goverment because of my financial background. I continued to trade using hand made charts ans somre services for manny years.

When the computer revolution hit I used stock charts and still do today.

In january of this year I tried my hand at black box trading and lost to date 50% of my money. From when I started the fundermental to technical has done an 180 degree change. My mistake was getting into the computer end where I was way over my head and trying to automate trading with out knowing the programing end.

I can tell you for a fact the markets are minipulated. In the old days techinical analysis worked much better because so few people were looking at charts and you could see it very clearly as opposed to today. Today it is much tougher because everyone is looking at the same thing and in order to have an edge you need to be really good with computers.

Hope this helps and was not to boring.

[RM686 10]

My pleasure John. Thanks

[rigel 10]

RM686,

Perhaps you could elaborate on which instruments you trade now and using which time frames and employing which methodology.

 

IMO if you look at various threads/forum here, like one on Wyckoff, Taylor, Candlesticks, Al Brooks, there is enough info. on various strategies/tactics to provide the required edge to any newcomer. One does not require purchase of sophisticated charting packs or attend seminars/courses etc for this.

[JBWTrader 10]

Hi Rigel

 

Just to comment on what you wrote ...I personally havnt seen a true edge on this site or any site for that matter....there's a lot of great wisdom and theory but as far as edges go there is not a lot here..

 

of course I could be wronggg... !!

 

Edges are hard to define in my opinion and even rarer to come across in a consisent manner on anything public...if at all...

 

And for someone sharing a strategy of true edge on here is very , very unlikely....but you never know hey !

 

All the Best

John

[jonbig04 10]

Hi Rigel

 

Just to comment on what you wrote ...I personally havnt seen a true edge on this site or any site for that matter....there's a lot of great wisdom and theory but as far as edges go there is not a lot here..

 

of course I could be wronggg... !!

 

Edges are hard to define in my opinion and even rarer to come across in a consisent manner on anything public...if at all...

 

And for someone sharing a strategy of true edge on here is very , very unlikely....but you never know hey !

 

All the Best

John

 

 

I disagree. I don't think an edge is hard to find. Support and resistance is an edge. There could be many more for all I know, but there is a clear cut and defined one in S/R. I don't know what to say to people that can't see the advantage of S/R. Turning that edge into constant profit is the hard part for various reasons.

 

So there's an edge for ya.

 

BTW, I think "consistently profitable" should be defined. A trader who makes $75 a month and has for 5 years straight? Or maybe a trader thats made $5 million a month for 2 months straight? Somewhere in between? Seems tough to define to me. Even more difficult is making a case for how long it takes to get there when we haven't even agreed on what "there" is.

[JBWTrader 10]

All good points Jonbig04

 

you raise some good points...eg consistency, profitability,

 

Also its a struggle to define what is a real edge....too many people have different ideas on this...

 

Certainly an edge linked to the outcome of consistent profits over time is very important...

 

 

Oh and thanks for ya edge ! to tell you the truth I started out looking at horizontal S/R , confluence's etc....at reading price....I found that this was difficult for me to follow...perhaps I didnt believe in it...doesnt mean it doesnt work...but I struggled...

 

I would say you have a lot more discipline than me though JohnBig04...! I have read your journal and I admire your sticking to the rules you have found...

 

yeah thats right where is "where" exactly and does a defined edge help us answer that...

 

All the Best

John

[BlowFish 10]

Show me 1 for ETFS or STOCKS

 

Take a look at what Thalestrader has been posting. Nothing sexy just simple break outs of stocks that have gapped from the open (if I understand correctly). Now it could all be a sham of course but there are enough real time trades posted to make it look credible to me. Of course there are some people that sincerely believe it's impossible to make money trading break outs, it is not surprising that they can't. (Actually they are possibly ne of my my least favourite trades as it hapens but that's another story). There are some people that seem to believe that it is not possible to make money trading at all (for a retail trader), it is hardly surprising they don't. Again I wonder why on earth they would hang round trading forums.

[DbPhoenix 42]

I find it funny that people will insist that there are no edges to be found here. Or anywhere. That no one who claims to make money on message boards is actually doing so, that they're making it all up.

 

But while it's true that many if not most of those who post to message boards lead full and rich fantasy lives, it is also true that one can show them where the money is, even paint a big red X over it, and none but a very few can be bothered even to bend over and pick it up.

[rigel 10]

Hi Rigel

 

Just to comment on what you wrote ...I personally havnt seen a true edge on this site or any site for that matter....there's a lot of great wisdom and theory but as far as edges go there is not a lot here..

 

of course I could be wronggg... !!

 

Edges are hard to define in my opinion and even rarer to come across in a consisent manner on anything public...if at all...

 

And for someone sharing a strategy of true edge on here is very , very unlikely....but you never know hey !

 

All the Best

John

 

Here is a super definition of an Edge by Dbphoenix:

 

"An edge is the knowledge proved through research that a particular price pattern or market behavior offers an acceptable level of predictability and risk to reward to provide a consistently profitable outcome over time."

 

This means you have to develop your own edge and this embodies considerable effort, study, screen time, testing, establishing strategies/tactics with entry/exit rules, discipline to follow those rules and paramount of all is the ability to adopt a probabilitistic mindset.

To look for an edge elsewhere is akin to looking for a setup with a green light to enter and red light to exit, a futile search.

 

In this respect there is more than sufficient info. on this excellent website for any newcomer.

 

eg. From Taylors thread, there are adequate posts and insights there to learn the basics of his method, then a trader has to make an effort to study and create a book, determine price objectives for each day, there are specific rules for trading each day to focus on, depending on your designation of the day i.e Buy Day, Sell Day, Sell Short Day.

 

With the strategies in place, the tactics for entry and exit are determined by study of price action, Wyckoff forum has enough info.(both theory and practical) to throttle an elephant. However in Wyckoff, there are no green and red lights, considerable time and effort has to be put into to read the market.

 

What does all this mean: Effort on the part of the trader to establish an edge in the marketplace.

Any experienced trader would be aware of all this. Does not take 30-40 yrs to figure it out

Whether some other traders are making money or not is largely irrelevant. I am sure there are many here who are making adequate to decent living out of trading be it daytrading or swing trading. Don't require posts by George Soros or Buffet here to gain confidence

 

Still waiting some input on RM686 own methodology, afterall with 40yrs experience, he should have a whole manual on edges. Why not become a pioneer and post some here with charts rather than winging that none exists on these sites.

 

And if folks already have this knowledge i.e non-existence of real edge info, gained through past experience, then why bother to come on to the forums in the first place and if the urge to do that is proving irresistable, they as I said before, why not make a pioneering effort and be the first to do that:)))

Edited August 5, 2009 by rigel

[Shamal 11]

Great Post rigel,

I too am waiting for some input from RM686, quite keen to see what a trader with 30-40yrs experience has to say about his own edges.