It’s oath-taking time.

It’s time to promise yourself that you’re willing to accept the reality of the task at hand. And that reality is that it’s going to take time, it’s going to take effort and it’s going to take dedication. Trading is a profession, nothing less. You’ve got to take it seriously and look at it like that. It takes endless amounts of patience and a great deal of perseverance to learn this profession. And that’s okay, right? As they say, nothing worth the effort is easy. 

I realize, of course, that without actually going through the journey yet you won’t be able to fully understand what you’re in for. But look at it just like any other profession. If you were going to go through medical school or law school you would have an idea that it’s going to take time, effort and dedication, right? You may not be saving lives or interpreting and applying law that could free the innocent from prison, but the level of preparation is the same. You’re going to have to learn a heck of a lot and spend a heck of lot of time applying it over and over again. Get ready to earn a PhD in trading.

Why does becoming a profitable trader take so much time and effort? Frankly, because there’s so much to learn and understand and apply and the more information and practice you have the better. There are many, many terms and concepts that need to be fully understood and there is just no substitute for knowledge and experience when you’re trading the markets. The sooner you can get started and the more terms and concepts you can absorb and begin to apply the better. You don’t have to know absolutely everything in order to be a profitable trader but you do have to know and understand a great deal. And the more information you have and the better understanding you have of what you’re doing the better you’ll be at making money in the markets.

One of the first and most important things you’ll have to understand and accept before you begin is that everybody has a different pace and style of learning, which means you have a pace and style that is unique to you. Some can learn very well from the written word while others need more visual assistance. Some understand concepts very quickly while others require more time to ruminate on them before absorbing them fully. 

It’s important to remind yourself that it’s not a race because there’s going to be a period of time in the beginning that you’re focusing more on learning than on making money. You simply can’t expect to just jump in and start making money, so you’ll have to take the time to practice and learn. If you already know the learning methods that work best for you then use that knowledge to your benefit. If not, make sure you’re paying attention to this as you go so that you can give yourself the best chance to learn concepts more fully and effectively apply them. This is especially important if you don’t have a lot of time to devote to learning how to trade.

You must also agree to not be too hard on yourself. We all have that inner voice that both praises and criticizes, and some of us have a voice that can be downright nasty. As hard as our family, friends, spouses and colleagues can be on us we are all typically hardest on ourselves. But this can be counterproductive when learning something as fraught with psychological land mines as trading is. As I said in my introduction, profitable trading relies on many things including – and maybe most importantly – understanding and accepting exactly who you are. This means you have to accept what you’re good at and what you’re NOT good at. 

Instead of beating yourself up for struggling with a concept or the proper application of one, turn your inner voice into a coach (and not one of those hyper-demanding ones who screams and curses) who is helping you to succeed. A good coach will be honest with you, give you a full analysis of why you’re not able to perform effectively and then give you clear and concise suggestions for how to improve. Remember that struggling with certain areas of trading doesn’t mean you’re a bad trader or a bad person.  It just means you have to figure out specific ways of getting better at specific things. 

But it also could mean that a certain style of trading doesn’t match your personality, and this realization and its acceptance is crucial to becoming a profitable trader. There will be times along the way that you’ll have to accept defeat in certain trading styles in order to keep yourself moving forward. This is not an easy task for many of us, especially those of us who are more competitive and driven to succeed. But in order to become a consistently profitable trader you have to be willing to sacrifice the need to be good at something that doesn’t fit your personality in order to be REALLY good at something that does.

So you’ll have to agree to have patience with yourself and with the process. It’s going to take time and it’s going to take overcoming obstacles. It’s going to take dealing with losses and feeling bad about yourself. Promise to take a deep breath and work hard every day. Promise to stay focused on the ultimate goal and to have faith in your instincts. And promise to give yourself a break.

Another very important reality you absolutely HAVE to accept before beginning your trading career is that there is no trade or strategy that works all the time in every market environment. There are people who will try to sell you this idea and you must resist it at every turn. You’ll be inundated by emails and other promotional material that will lead you to believe they have that particular style or strategy that always works, no matter what the market environment may be. This does NOT exist and you have to force yourself to accept it before you go any further into this world. 

The concept of the “Golden Goose” strategy or “Holy Grail” strategy, which is a strategy that works all the time in every market environment, is well known in the trading community. Any consistently profitable trader, unless they’re trying to sell you something, will tell you it doesn’t exist. This is a difficult concept to accept and the main reason many retail traders quit trading. Learning to trade is hard and at a certain point all less experienced traders get tired of trying so hard to make money with flat to negative results. So they start to fantasize about somebody just giving them the Golden Goose or Holy Grail so that they don’t have to feel that terrible sense of futility anymore. And there are plenty of people who are happy to perpetuate this fantasy simply because they make money from it.

This is what traps you on the hamster wheel in the Exploration Phase. It’s called the strategy-hopping stage and it can be a make-or-break time for a trader. When you start to believe in the Golden Goose or Holy Grail strategy you’re relying on something that someone else designed that you may not fully understand to make money for you all the time. When it loses, and it will lose, you don’t understand why it lost so you think it simply doesn’t work after all and then you blame the strategy instead of learning everything you can about it, making it your own and holding yourself accountable for the results. You scrap the strategy and then move on to the next Holy Grail only to experience the same thing until you’ve simply had enough, believe profitable trading doesn’t exist and call it quits. 

It’s a vicious cycle and I wouldn’t wish it on my worst enemy. Do yourself a big favor and accept this now. Promise to always hold yourself accountable and not any particular strategy. This is not going to be easy but it’s going to be necessary if you want to have any chance at becoming consistently profitable.

Last of all, but certainly not least, you have to promise not to risk all of your trading capital – and especially your net worth – on one trade or one type of strategy. Do not take on excessive risk in the markets because then you’re doing what your cousin Bob said to you last Christmas when you announced to your family you’d be learning how to trade. You’re just gambling at that point and you might as well take your money to Vegas. I’m sure Bob would love to join you, in fact.

Accept the fact that it is highly unlikely – virtually impossible, really – that you are going to become a millionaire overnight in the trading business. Always fight any sense of greed because it will entice you into taking on excessive risk or doing ill-advised things that lead to big losses. Always remember that if you take on excessive risk in your account in order to become a millionaire you are absolutely more likely to blow up your account than to become suddenly rich. I’ve seen it happen, and I’ve seen it happen to experienced traders who should have known better. But greed got the better of them and they suffered the consequences.

If you want to become a profitable trader you have to live by the mantras, “Live to trade another day” and “Steady as she goes.” Always risk only what is comfortable for your particular capital level. And when you set stop losses, obey them. Never talk yourself out of them. Talking yourself out of your stop losses is how you never become profitable. As far as your stop losses go, it really just comes down to a choice you have to make: do you want to be right or do you want to make money?

Was I able to accept the task at hand?

I was able to accept some things but not others. I already had a good idea of my particular pace and style of learning so I followed that as best I could. I accepted that it would most likely be a great deal of work and I was way too risk-averse to put too much capital into any one trade or strategy. But I didn’t realize how important it would be to accept the other concepts and my journey was that much harder because of it. I was very hard on myself and my expectations were unreasonable in the beginning, which led to me quitting several times. I also got trapped on the hamster wheel way longer than I like to admit.

In my defense, though, I simply didn’t know all of the things that would be so crucial to accept ahead of time, and this is why I’m hoping that by providing these I can help you learn from my mistakes and the mistakes of so many others. Like I said before, at the beginning of your journey it’s just hard to have a really good idea of what you’re in for. Trading is such a personal journey and you have to deal with some demons and accept some tough things about yourself in order to get to the other side.

I recommend really taking to heart what I’ve talked about in this step. It really is oath-taking time. Understand that you will be confronted by these obstacles and promise yourself that you’ll stay resilient enough to overcome them. You’ll thank yourself in the end.