It’s both interesting and fascinating in equal measures, to note the answers and the reactions to the question, “how long do you think it’ll take you to eventually become profitable?” when it’s posed to novice traders. We come into this industry with certain intentions and ambitions; to become profitable, to make money, to carve out an independent career and yet most novice traders when asked this basic question, will have no mental process in place to answer the question. The majority of retail traders will either virtually or physically throw their shoulders when faced with the question, which is a completely illogical position. If we set up a small business we’ll generally be working to a business plan, the general consensus is to aim for our new business to be profitable within three years and yet the majority of traders will not have any plan to become profitable inside any set period of time.
Following Your Trading Plan
Novice traders appear to ignore this critical issue, preferring instead to concentrate on and occasionally obsess over other details. The tipping point of profitability, this crucial aspect of our trading, appears to be set by our hopes and dreams, as opposed to the various and trusted key metrics we can put in place. In order to enjoy success we have to:
- Set milestones to measure our route to profitability,
- Set a reasonable and achievable time by which we should expect to become profitable.
We shouldn’t simply imagine that there’ll be a single day, or a particular trading session, when all our trials and efforts will suddenly lead to a profitable strategy which we’ll rinse and repeat, as we then take money out of the market at will.
Setting a time scale, a date in the future, at which we’ll be profitable, not only provides us a goal, it prevents us from drifting aimlessly were our trading is concerned. It encourages us to set a time in the future at which we have to be profitable, or make some vital changes to our overall trading plan. That period of time does, however, have to be realistic and this factor is where many novice traders stumble. To imagine you’ll be consistently profitable inside three months, having perfected a bulletproof trading blueprint in that time, is overly ambitious and unrealistic, it’s far more likely that you’ll still be fine tuning your plan, as you’re still experimenting with various trading methods, as opposed to basking in the reflective glory of a growing account.
If we set ourselves a time period of perhaps a year, by which time we should be trading profitably, then we also need to ensure that our risk is adjusted on our account balance, to last such a time. Therefore, a realistic time scale in many ways, by accident rather than design, encourages us to lower our risk per trade, to ensure we last the distance and despite what we may think of at the outset as we’re impatient to progress, a year is a short time in terms of trading. The other unforeseen consequence in setting a target, a horizon by which you intend to be profitable, is that you’re making a professional commitment to your new found industry. You’re making a statement to yourself that you will be in this industry in a years’ time which, according to recent research, is two to three times more than most novice traders spend in the industry before giving up.
More helpful articles on this Topic:
- Set Forex Trading Goals That Work!
- What are Realistic Profit Targets for a Successful Trader?
- How setting trading goals will help us achieve success