Trading results can be frustrating – whether you’re not making money or you’re not making as much as you’d like. But it might not always be your strategy that is making the difference. You have to learn a little more about how to handle your market exposure. There are some big factors, which make an average trader different from a professional trader.
Firstly, you need to master all the basics. Once you master the fundamentals, you can learn proven strategies and get experience in implementing them.
A major aspect of the trading profession is being realistic. There is no perfect trading strategy that consistently produces profits. It is possible to devote the most time to information that will make you a more efficient and profitable trader if you learn how to distinguish accurate information from that which is false or misleading.
Novice amateur
Novice traders acknowledge the importance of risk management, but do not follow proper money management plans, are inconsistent with volume application to each trade, and allow trades to draw significant portion of their account on a single trade.
The lack of consistency in their risk management is the reason why so many traders leave this business. They destroy their accounts because of inconsistent risk management.
They believe they can pull consistent profits out of the markets each month as long as they use the edge they have learned correctly and trade it consistently.
In the end, amateurs who are unable to generate a consistent income are left with a very hollow and empty feeling.
Pro Trader
As a professional trader, one needs to be consistent with risk management, since one trade can ruin an account. You cannot control the price, but you can choose the volume on each trade and where to set the stop loss.
Most professional traders never let their account fall more than 2% on a single trade. They rarely experience a major loss since they continually utilize stop-loss orders on all of their trades and correctly size their position size to win healthy profit and lose small amount.
A professional trader understands that the advantage they are using is going to perform better in certain market conditions, regardless of what market you are trading. Price action will change as the market cycles change as well.
It is understandable and expected that the monetary policy of central banks will impact their trading edge from time to time, and they should expect a period of drawdown from time to time. Whenever they place a trade, they stay with it until they reach their target or stop loss, and by following their edge through the various market cycles they achieve success.
Consistency, The Heaviest difference between good and bad traders
Consistency, on its own, sums up almost two-third part of the difference between average and pro trader. Professional traders want to make steady profits in their trading, every day, week and month, without excessive drawdowns and losses.
The rookie wins a certain amount one week and loses ten times the next. They keep on switching their technique after every failed attempt. They get confused over and over, and can’t put their best foot forward.
Professional traders, on the other hand, stick to their plans for months or years and analyze the consistency of their trading strategies, generating a healthy profit every month and year.
