There are two types on the market, whether called AA traders, or BB operators are, the name does not matter, what is not important…
Professional traders and professional operators, there is no difference, is a kind of people…
In addition to the professional traders, the other group is the retail investors…
The most important differences are a couple of things.
1. Professional traders have professional learning and training.
Retail investors do not.
2. Professional traders have professional viewing software, timely (even ahead of time), and reliable sources of information.
(Information value is data, message surface).
Retail investors, no professional watch software, most or the vast majority of MT4, information from some websites.
3. Before opening positions, professional traders have specific plans, such as at what point, what list (long, short) and how much to do.
How much stop loss, how much stop gain…
What if you stop a loss, what if you stop a gain.
Position control, management.
Psychological control.
Wait, wait, wait…
It’s all made in advance…
Individual investors do what they want, or for no particular reason.
4. What does the trader do after the order comes in??
Retail admission, most is staring at the disk, the mood also follows the ups and downs of the K line.
Brett Steenbarger is a well-known trading psychology coach in the United States. He has worked as a trader psychology coach at several top training institutions on Wall Street.
As a psychology professor and veteran trader, Brett understands the psychology of trading better than anyone else.
And Hui agrees that it takes more than a trading strategy to be a successful trader.
Almost all senior traders also admit that psychology and skill play an important role in their trading.
In today’s article, we will continue to share one of Brett’s trading training lessons: What are the advantages of professional traders?
Brett Steenbarger I have worked with traders at professional trading houses many times.
Understanding the workings of traders and trading houses is always an enlightening experience.
If I had to sum it up, here are a few things that struck me: 1) Many well-performing traders watch and trade various markets and actively seek out opportunities.
When volatility dries up in one market, they move into others.
The average retail trader will often entangle and overtrade a market in the hope of making high returns.
While professional traders may have a top-down or bottom-up view of the market (drawing ideas from big economic trends or from the performance of individual companies), in any case they have a “framework” for thinking about the market.
Inexperienced traders lack this mindset.
2) Many high-performing traders have a good view of patterns — they see the big picture because they move across multiple markets, so they know how those markets relate to each other.
This allows them to exploit big themes and develop trading ideas that connect one market to another.
An obvious example is understanding how global interest rate differentials affect capital flows.
Another example is figuring out how to price an asset relative to other assets to take advantage of market Mispricing.
Retail traders trade a limited number of targets and ignore the context in which these patterns occur.
They lack the framework to think about market pricing.
3) All high-performing trading houses have risk managers who monitor the performance of individual traders (and the firm as a whole).
They help traders adjust the size of their positions to fit the needs of their portfolios and help traders during periods of reduced trading.
It is difficult for individual retail traders to take on this role themselves.
Good traders spend a lot of time and effort on risk management: they know how much they want to earn and take on each trade.
Small and medium-sized retail traders tend to have much more money at stake per trade than professional traders with big money.
4) Many well-performing traders know how to cut profits properly because their profit targets are so reasonable. In fact, this is a very interesting phenomenon.
I’ve never heard professionals bother doubling their capital.
Only retail traders are willing to take big risks and do whatever it takes to get big returns quickly.
Many good traders I know focus on consistency and good risk-adjusted returns.
I’ve almost never heard of small and medium-sized retail traders valuing risk-adjusted returns.
It is even fair to say that I myself have never seen a retail trader know what his Sharpe Ratio is.
I don’t think most ordinary traders can even explain the concept of value at risk (VAR).
5) Many top traders make full use of psychology to gain an edge that is difficult to gain through “trading training”.
Small and medium-sized retail traders are often limited to the problems encountered by beginners.
Top traders also suffer losses, but they try to identify and build advantages rather than simply “trading plans”.
A large number of considerations labeled “the psychology of trading” tend to apply only to novice traders.
Experienced traders have no doubt encountered a situation in which the price of a target suddenly changes for several days when the general public is bullish.
It is quite possible that such adjustments are “traps” set by institutional traders to “wash out” weak/infirm traders.
Professional traders have superior psychology, sufficient capital, and retail investors are often treated as counterparties, making it difficult for them to win in a game that is unfair from the start.
At the end of the day, whether you’re a professional or an amateur retail investor, it all depends on how you do your job, not the environment.
Of course, it’s easier to specialize when you’re surrounded by professionals.
The best traders I know spend a lot of time thinking about trading ideas, studying markets, and staying on top of global trends.
In my experience, the ratio of preparation time to actual trading time is a valuable indicator of a trader’s level of expertise.
The best traders, like the best athletes, never stop trying to improve their work.
They use psychology not only to improve their performance, but also as a means of self-transcendence.
What small and medium-sized retail traders can do is to be professional in their approach to trading and think about the market as closely as possible to the trades of professional traders, so as not to be left behind by institutions and big players in the market.
