I recently wrote this for a blog, may help you answer your question 
How Long Does it Take to be Profitable?
[I]By RiskonFX[/I]
Perhaps the most frequently asked question of all, and yet one of the most difficult questions to answer as there are variables which effect such a decision:
- How much time can you invest into learning and practicing material
- Do you have a background in finance, risk management, statistics or general trading
- What is your own risk appetite and are you emotionally reluctant to accepting losses
- Can you deal with self motivation, and accept that you are wrong on occasions
- How do you value money, and how much capital do you have to invest into learning
- Do you have objectives from the get-go so you can analyse your potential progress
And finally, yet often not realised from the very start:
Are you willing to treat trading as a business in all aspects, and not just that of money management, but also by objectifying your own personal needs as an active source of measuring your success and ability to progress.
Just think about what I’m about to say for a moment. Trading is unique in the sense of a business for the following reasons…
Can you name any other business where there are almost no barriers to entry for everyone? The cost of capital is also almost zero, you only need a PC and an internet connection, and that’s it, you’re good to go. So what does this really mean, it means that the competition is fierce between turning a profit as anyone can freely enter into this industry. Trading may be considered as a zero sum business (before transaction costs), meaning for every profitable participant there is an equal losing participant. However this is not equally distributed between retail traders: don’t think for one moment that 50% of retail traders make money and the other 50% lose - it doesn’t work like that. A much higher proportion of retail traders don’t make it than the amount who actually do. I highly doubt more than 5% to 7.50% of ALL retail traders go the whole way to turning constant profits.
Most other businesses require some kind of property to trade goods and/or services from. Then you have to pay for rent and electricity, water and gas. You may need transport to visit clients which comes with insurance and tax costs. Perhaps you need to pay an advertising firm to promote your business to gain leads and increase profits. Do you need to pay for professional qualifications in order to legally trade in the named industry…the list goes on and on, and the costs can add up. But these costs are acceptable as they are seen as start up costs (and perhaps running costs in some situations), which are required to open and maintain the business in question.
Retail Trading from home requires non of the above, therefore in order to succeed you have to be at the best of your ability and realise that education is the real cost in this business. I’m not talking about the cost of education in perhaps monetary terms, but more so as the time that you invest into learning. This is the only variable you can control which can effect how successful you actually are.
For example, buying a $10,000 top spec PC to trade from makes no difference. Moving to Barbados to trade from a penthouse will make no difference. Paying for the fastest internet connection in town will make no difference. I’m hoping you can see my point by now? - investing in tangible assets above and beyond the required basics is pointless.
So lets bring this back to the opening question - How long does it take to be profitable? The most significant variable to this question is “how much time can you invest into learning”, this is the real holy grail, not finding some trading system that will make you money 100% of the time…they simply don’t exist.
How long did it take for me to be profitable? It took much much longer than I originally anticipated, close to 4 years. I spent hours and hours each week getting to grips with creating a fully quantified system that remained profitable for over 10 years of data. It had to stay above water during recession crashes, flash crashes, boom and bust periods and all other market cycles. Learning statistics was also another hurdle to overcome, even though I’ve always been great with numbers; applying it to trading risk took some time to get my head around. This was all done from knowing nothing. I can say with confidence that it’s taken over 1,000 hours of screen time to get to where I am now - so perhaps use that as a good estimate.
[U]Get Profitable Quicker?[/U]
Is there a way to speed up the process from a complete newbie to a successful novice trader, well in my view, yes. The fundamental problem with trading, specifically FX trading due to its popularity, is that there is a lot of free education on-line. This may be seen as a great resource, however most of the time this material is rather unstructured, and not arranged in a logical fashion. Rather than building an education from the ground up starting with the basic foundations, new traders tend to ignore this (because they don’t know about it) and start to try and learn more complex material that further confuses them. For example, why would you build the walls of a house before digging out the required concrete foundations.
To further add to this problem, a fairly large amount of this free on-line material is posted by other traders, or by people who just have an interest in trading yet don’t trade themselves. We already know that the vast majority of retail traders are unprofitable, and yet we like to use their knowledge via on-line material as a source of education, it’s counter-productive and a waste of time. In my view, on-line free education is only a good resource if you have a structured syllabus directing you to the correct order in which this material should be delivered.
“[B]Getting a mentor who is a proven to be profitable trader is a cost well worth spending[/B]”
Private mentorship is the real only way to speed up the learning process, whether this is paid for or for free from a proven to be profitable trader. They can direct you onto the correct path so that you learn in a logical fashion which in turn makes the education process far more efficient. However, make sure the mentor on offer is legitimate and supplies you with a verified statement showing proof of his profits. Unfortunately there are lots of scams in this area of business, so carrying out your own due diligence will pay off big time.