You must be wondering why there is so much difference between the types of traders you interact with daily. What are the tricks that experienced traders have that help them make large profits and how they manage to steer themselves to safety in perilous times?
This blog is going to be all about differentiating the amateur traders from the professional traders. In this blog, you will learn all that experienced traders do differently and how they do it.
1. Professionals Enjoy Trading
Professional traders are the people who love their job and are in the position for the thrill and the money. They are people who are passionate about what they do, and they have detailed information on the whole trading process.
Professionals are often not trading solely to make a capital gain. They are often buying and selling simply because they love it. Professional traders have elaborately constructed mind maps in their heads, and they can make different strategies using a blink of a second.
Professionals are also skilled in ways to manage risk and have a much higher risk threshold than other traders.
2. Pros Don’t Panic Quickly
Professional traders have a much higher risk appetite and are also willing to take action quickly. In situations where amateurs would panic, the professional traders would remain calm.
Most amateur traders on forex are only there to be able to make a quick buck, and they frequently let emotions override their purchasing decisions and also their rationality.
Amateur traders often possess the knowledge and intuition that can help them succeed, but they are often not able to carry out with their intuition because they tend to get very emotional.
Learning the trading strategies is very simple, and anyone can learn how to trade. The real skill is being able to keep your head in the game and to be able to make rational decisions.
Most trading agencies, while hiring new traders, first look at their ability to handle stress in high-pressure market environments and use those to evaluate the trading personality before giving a person actual stock market access to work on.
3. Wasting Screen Time
Most amateur traders spend hours making decisions and also spend hours looking through different charts and trying to decide the best course of action for them. Amateur traders will watch countless charts and flip through numerous charts before making any decision.
Professional traders don’t waste that much time before making a decision. A professional trader understands that it doesn’t matter how many hours you put on the screen and that the longer you sit in front of a computer is not going to make you a better trader magically.
Amateur traders believe that putting in much effort is key to carrying out successful trading activities. Inexperienced traders don’t know what they are looking for, whereas the professional trader knows what he is looking for and knows when he is going to make a trade.
The professional traders spend more time on their trading journals and review their past transactions to find out ways through which they can make their trade better.
4. An Amateur Is Easily Distracted
New traders entering the market often don’t realize the importance of devoting their undivided attention to a cause. An amateur trader tries to multitask his activities and thus becomes slower and also misses opportunities because he tends to get distracted with Facebook.
To be a successful trader, you need to give proper time to trading. It doesn’t matter how long you sit in front of the screen as long as you can give your undivided attention to the tasks at hand. You can even spend 3 hours per day trading as long as you can focus on the task at hand properly.
When a professional trader is trading, he does nothing but focuses on the trading task at hand. While he is trading, he is 100% focused on his job and only watches charts and keeps his eye on press releases.
Professional traders know how important it is to be 100% focused, and if the trader cannot concentrate, he turns off his computer and takes a break. He works on his trading skills and just takes the day off.
5. Amateurs Get Easily Overconfident
One of the common mistakes that amateur traders make is that they quickly become overconfident as soon as they make a streak of winning trades. This overconfidence can cause them to become more relaxed towards their deals and can also cause them to carry out lousy trading activities that can cause their morale to go down.
Professional traders are accustomed to carrying out successful trades, and they understand that both good and bad trades will happen, and they need not become too emotionally invested in each transaction.
It is not something unusual to see the new traders who hit a winning streak end up losing all their profits on a single trade. It is something quite common and is something that happens because of overconfidence.
Professional traders always follow all of their plans religiously and realize that they cannot predict future trends accurately, no matter how experienced they are in the business. A winning streak is a regular occurrence, but professional traders don’ t take their winning streaks and use them to increase their risk appetite.
Professional traders always follow their plans and always follow their risk and money management rules and don’t attempt to change them.
6. Amateurs Are Easily Demotivated
New traders often aren’t familiar with the market trends and the way the market operates. The lack of information can cause them to lose money quite easily, and this can result in them being demotivated and can also result in them losing sales.
Inexperienced traders often have trouble accepting when they are wrong, and this can cause them to lose even more money. To be a trader, you need to be able to separate your emotions from the trading game.
Professional traders realize that the stop loss point is where you need to exit the market and where you need to understand that you were wrong. One trade is just trade, and the outcome of a single trade does not matter.
How you deal with losses is the mark of a good trader. You should always know when to stop and know the best time to exit the market to protect you from further losses.
7. Amateurs Want Quick Money
Well, this isn’t entirely the fault of the new traders. Society tends to believe that traders are people who regularly deal with hordes of money each day. When we think about traders, we make a mental image of a person throwing money around everywhere.
This image is far from reality. Traders often do not make as much money as we think they make. And forex traders only trade in currency movements, which means that they too do not make that much profit.
New traders in the market have a lot less liquidity and are often very impatient and are continually looking for ways through which they can make quick money. If any trade is prolonged, they will quickly get frustrated and angry.
New traders expect the market to be fluctuating all the time, which is hardly the case. The market is the most volatile in the early morning when it opens and 15 minutes before the market is closing.
Amateur traders that believe that they can make quick money end up losing the most amount of money over time. Surveys have also gone on to prove this fact.
Trading is not an easy profession, and it is a profession that requires much hard work and much hustle before you start making profits. The job itself is very stressful, which makes it very hard for someone who is not interested in the role to remain consistently dedicated to the cause.
8. Professional Traders Are Crazy Good With Numbers
Naturally, this comes with the profession itself. Most professional traders are extremely good with numbers and can make elaborate calculations with the blink of an eye. They can even approximate figures and always make investments based on their estimations.
Where amateur traders might take much time in their calculations and still not be sure whether or not they have calculated everything correctly, professional traders can carry out all their calculations and execute decisions with a blink of an eye.
The ability to calculate and act quickly is crucial for traders and also gives them a first-mover advantage. Professional traders can promptly move in and take benefit from the arbitrage profit.
9. Professionals Are Willing To Learn
The key to becoming a professional is learning from your mistakes and trying to change your strategy. Good traders often check their trading history and spend time analyzing each of their transactions carefully.
Successful traders possess the ability to learn from their mistakes and apply new strategies. Successful traders do not waste time sticking to old plans that don’t give them a profit. Instead, professionals spend time learning new approaches and also dedicate a certain amount of time to perfecting the said strategies.
Amateur traders often don’t analyze their past transactions and often do not have a set structure that they follow while trading. Not analyzing their strategies can cause them to make losses instead of earnings and can easily cause them to become demotivated.
The financial market is constantly changing and evolving. Numerous external factors influence the market and its trade and to combat that you always need to be thinking with your head, and you always need to plan three steps ahead.
Amateurs need to keep themselves posted with the news and speculations, and they need to utilize their time efficiently. By learning actively, you will be able to perfect your existing trading strategies, and you will also be able to identify new trading opportunities.
10. Professionals Are More Patient Than The Amateurs
You don’t start rolling in money overnight. Making a profit requires much hard work and also requires patience. You will quite naturally have to wait and be persistent. Most amateurs get impatient with the stock market quickly and want things to move in the way they want.
Most professional traders are often sitting idle and waiting for the perfect opportunity to enter and to exit the market. Amateurs might tend to enter the market too soon and leave too early.
For traders, timing is everything, and learning how to time yourself properly can end up with you gaining much profit. Every trader, however, has a different trading style; some of us might be trading via scalping, and some of us might prefer swing trading.
For amateur traders, you need to find out which strategy works best for you and which approach you can fit into your schedule. There is no right or wrong way to trade, and the money you earn depends on your commitment and also on your strategy.
Some of us might be good at day trading where we buy and sell stocks on the same day, whereas others would be good at scalpel trading where we make rapid exchanges for small profits. The more patient ones from us would prefer a swing trading strategy where they wait for the market to give them an advantage for around 5-30 days.
If you are a new trader looking to explore the market, then you need not to panic and sit calmly. It might be best to train yourself effectively before starting your training venture. You should be familiar with all the market trends before making a trade, and you should also try your best not to get too emotional about your losses.
It is always best to risk only the amount that you can afford to lose. Trading does not end up with results overnight, and the entire process takes much time to master. While trading it is important to prioritize your mental health and not take too many risks. Too many risks can cause you to crash really badly and there is also a high chance that you might never be able to recover.