I'm having a difficult time understanding how to create simple custom shaders.

I've read old threads, but most didn't say the process of compiling the shader and applying it. Can I compile it via editor or has to be with source of engine

you need source to compile the shaders, this is a complicated process, maybe Greg can talk a bit more about it.

there was at some point some talk about improving the shaders, and do custom shaders in the editor, but i think since then this idea has been abandoned

georgatos had worked on the shaders in the past, maybe check his post

You can do this only by modifying the engine source code.

Ok I'll look at his post, needed a point in the right direction i'll look at source thanks.