Everybody shares an opinion that professional institutional traders are something special, that their approach to the markets and trading is some super-secret tool that can’t be thought to retail traders.
Everybody thinks that institutional traders are much smarter than retail traders, they have an advantage over everybody, which is why they constantly win.
This is not quite true, to be honest.
In this blog post, I will try to explain why institutional traders have a bit higher winning rates than us, the retail traders. It’s not that hard to follow and copy their work.
Focus on the trading process
Pros know what their job is, when they turn on their computers it’s all about trading. They don’t check Facebook, Instagram, TikTok, Youtube. Pros are checking charts, all the time. They are monitoring what their desired pairs are doing and are waiting for the best option to be set for them to execute their trading plan.
On the other hand, the majority of beginner retail traders are wasting their time on things that are not trading related, Things that are simply time wasters. Instead of looking for opportunities, retail traders are forcing trades.
This procrastination can easily become destructive for beginners.
Pros know what they need to do for them to be profitable in the long run. No trades today? No problem, there is plenty of work to be done for tomorrow, next week, or month. Test out the current strategy again, check whether or not their approach needs some adjustments, redo the trading plan, check their goals.
I have seen a lot of beginner traders losing precious time sitting in front of a computer, thinking that if they spend 8 to 10 hours a day staring at a screen, they will become traders faster. Hm…
Not true, and never will be. It’s what you do when you are in front of your charts, not how much time you spent.
When you turn on your computer, it’s much better to take a full hour, or two, and actually do something meaningful than to sit and watch charts the entire day, without actually doing something.
Respect your time, it’s not going to come back to you. Dedicate the exact number of hours per day and actually do the work you wanted to do today. You will make progress much faster if you have a plan and know what are you going to do today, tomorrow, in two days.
Pros look at winning streaks like a good day at work. Nothing special, just a good day. They did their job in the best way possible and the winning streak is their reward. They know they deserve the reward in form of a winning streak that was just given to them.
On the other hand, amateur traders look at winning streaks like they are Gods. They start thinking of themselves as unbeatable traders, the best ones out there. They think they know everything and can do anything.
And, BOOOM… They are done!
This is what eventually kills their trading.
A bad day at work when you are a trader is followed by losing streaks. Losing streaks are very normal for us. Pros look at losing streaks like a red flag, a sign that they did not commit to their work on their best level. They take a step back and analyze what went wrong, whether or not the strategy was followed in the best way possible, and if the trading plan was followed point by point.
Amateurs, when facing a losing streak are usually blaming the strategy or the broker. But never themselves.
They don’t think that the problem is in their approach to trading, and they go on and change the strategy. Since they think that the strategy is to be blamed, they change them all the time.
There is no 100% winning trading system.
You can make money trading by having 30% winning trades.
Pros consider trading a marathon. They don’t chase large profits overall; they look at how trading can change their lives in the next couple of years.
On contrary, amateurs want to make money now. A lot of money. Immediately.
Without knowledge, proper account size, and edge, they want a lot of money. They think that trading is a sprint, which they need to finish first.
Trading as a business is a marathon. Nothing more!
The biggest risk per trade pros have and feel comfortable with is 2% (on rare occasions, it can go to 3%). I personally go even lower, like 1%. The goal in this game is to survive another day and come back to the office tomorrow.
On the other hand, amateurs like betting big. Yes, I said betting, and this is what amateurs are doing. I mean, what do you think will happen if you open up a 2 lot position on a 2000 USD or EUR account?
Usually, the traders which do this, start praying for the markets to go in their favor.
Trading doesn’t have anything to do with higher powers, praying is for churches or mosques, synagogues. Not for trading.
Don’t be stupid and burn your entire account on a couple of trades.
When it comes to executing their trading plan and following the strategy, pros are relentless. They never hesitate when their strategy is showing them an opportunity. This is how you make money.
Amateurs can look for additional confirmations when it comes to entering a trade. They tend to add some oscillators that they have not been using before but have seen someone on YouTube using them.
They can also go to lower timeframes to give themselves additional confirmation on their setup.
And usually, they miss the ideal entry point pretty well because of this.
Amateurs need to have faith in their system and their ability to execute the trade without any hesitation.
Trust in the system
This point doesn’t require any special explanation. Everybody in this trading game of ours needs to know their trading system in and out.
Pros and cons of the strategy being used, when the strategy is performing above average, when below. When to add to a position, when to lower the position size, when to skip the trade.
This can only be done by demo testing and live trading.
These points are what I find to be the most important ones, the difference between successful and amateur traders.
Feel free to search for more, add them to your plan, use them as yours.