What Separates Amateur Traders From Professional Traders?

Want to trade like a professional trader? Well you are going to have to think and act like one first. That may seem like common sense but you would be surprised how many traders don’t make the connection.

Today I am going to dig into a few topics and nudge you to ask these questions about your own personal trading experience.

Do you have a proven edge? Over a large enough sample size, your trading should show a positive expectancy. If this is not the case, you should stop reading now because nothing else matters if you do not have an edge. Every professional trader in history has had a trigger that shows when one event in the market is more likely to happen than another, whether that edge was fundamental, technical, quantitative or any combination.

Question:  Do professional traders take a random guru’s position on a given market?

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Answer:  No, the professional trader has taken the time to calculate and understand what their edge is and exactly how it is derived.

Do you have a detailed trading plan? A trading plan is a written or typed document, not something you just keep in your head. The plan should explain your edge, what and how you will trade, performance evaluation, etc.

Question:  Do professional traders rely on seeing tickers on StockTwits or Twitter to build a strong watch list?

Answer:  Probably not. Although these platforms generate good ideas, professional traders have robust screening methods that provide them with the markets and securities where they can apply an edge.

Question:  Do professional traders ask for other trader’s opinions on a market once they are in a given position?

Answer:  No, they have a strategy for how they will manage the trade if the market moves for or against the given position.

trading strategies light bulbDo you have a method to constantly evolve? Trading, like life, is an everlasting journey. While it is important to stick to the trading plan, it is maybe more imperative to be able to modify the trading plan or even create a new one. Education in the market never ends. Traders who succeed over the long term continuously find or transform trading strategies.

Question:  Do professional traders have one trigger in one market on one timeframe?

Answer:  Probably not, the professional trader finds way to diversify into different strategies, markets and timeframes.

Question:  Do professional traders modify a proven edge when they experience a drawdown?

Answer:  No, they are able to find the balance between sticking to the system and being flexible with any adaptations.


Thanks for reading and good luck!

More from Anthony:  Finding Your Trading Edge And Using It!


Twitter:  @TraderTorchia

Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.