What Separates the Retail Forex Trader from the Professional?

How is it that retail traders are getting better pricing, but they still lose on a higher percentage of trades than institutional and professional traders?

Тhere are some reasons why retail traders aren’t as successful as professional traders.

Execution of Trading Strategy

Through many years of working on a trading desk and talking to customers and banks, I didn’t see much of a difference in the actual trading strategies between our trading desk, the trading desk at a bank, our institutional/professional traders, or our retail trader. Everyone has the same access to charting, technical analysis and pricing analysis.

Professional traders do not simply limit themselves to technical analysis. They know their own trading very well: their tendencies, how much they are comfortable risking, how to minimize their bad trades while maximizing their good trades. It’s more than even that. Good professional traders have scenario analysis that gives them further analysis on their own trading: expectancy, confidence, equity moving average, etc.

Professional traders also tend to look at a potential trade through the lens of many different trading strategies and many types technical analysis. They also have a pulse on the fundamentals behind the products they are trading. They eat, sleep, and breathe the markets.

Big Picture Oriented

A professional trader and a retail trader might be trading the same strategy and looking at the same chart to make a trade, but the professional trader is looking at many other things to determine the viability of a trade before entering the trade. There is no fear of missing a trade. The professional trader lets the trade come to them…they are not chasing trades.

So what are professional traders looking at that retail traders often ignore? Professional traders are looking at long- and short-term charts and analysis…and they ask themselves what could happen…how could this trade go wrong…how much could I lose on this trade?

A professional trader looks beyond this trade and is more concerned with the overall market. What could hinder me from hitting my limit? What could cause the market to move against me? When might I need to cut my losses? They aren’t waiting until they are in position to think through these things…they are asking these questions before making the trade.

More Discipline

Enough cannot be said about discipline in trading (or any endeavor). The best traders, professional or retail, are all very disciplined. Looking at the last two things that make people better traders, the best traders do their research before entering the trade. The best traders know why they are in a trade. They know when they are going to get out of a trade.

Read more:

• The Amateur VS The Professional; The Difference is in The Mind
• A story of a trader: ‘Trading can take over your life – but only if you let it’
• How to Filter Good & Bad Price Action Entry Signals
• The smartest way to invest your first $1000
• Should S&P500 be afraid from Friday 13th what the statistics look like