Most traders struggling to survive on the market seem to think that making money consistently in the markets is extremely difficult, and that they cannot achieve this.
I believe that the majority of traders failing to consistently earn in the markets, already know the things they have to do to be successful, but they are misusing this knowledge. All traders are motivated to earn in the markets, but a number of them are focused on the wrong things. Professional traders are inspired by a long-term result of their relationship with the markets, while amateurs most often get inspired by short-term results.
Why professionals make their profit? Here are 12 reasons that will surprise you:
1. Professionals do not spend so much time on the market analysis like you
You may think that you do not analyze the market fairly, or you ought to study economic news more to make money stably. I can almost guarantee that it is not so. I can also guarantee that you probably spend more time on market analysis than the pros do.
Professionals have their strategies and set-ups, they dissect the markets in time allotted for it, looking for their settings on the market, and then either enter the trade or remain out of the market. Think of it this way: why are you sitting here and wasting your mental powers, if the market does not have your set-ups? Maybe you’re not sure until the end, what are exactly your setups and strategy? This brings us to the second reason.
2. Professionals do not trade what they think or want to happen. They always trade what they see
A number of traders fall into the trap, getting stuck on certain things happening in the market, convincing the market is going to do what they want it to do or what they think it will do. Certainly, this makes them do stupid things, such as opening too large positions, or to trade anew.
Professionals know they can never be sure what the market is about to do, so they never become mentally or emotionally biased to any particular direction. They simply use their skills of reading the price charts to determine the most logical and likely coming direction of the market and then look for appropriate price action set-ups.
If they do not find anything obvious that suits existing trading plan, they do some other things: read books, go to the gym, and spend time with their family. They certainly do not trade just because they have “streamlined” set-ups in their head and they have a strong desire to try them out. Professionals exactly know what to look for on the market, and they trade only when they see a SHAPED set-up.
3. Professionals do not totally trust indicators
Early in the beginning of my trading career I realized that the indicators obscure not only my charts, but also my brain. It was so until I didn’t learn to trade price action and removed all the indicators that began adjusting for the market. Professionals know that they must be able to read the pure price graph, and this becomes the stumbling block of their technical analysis skills.
A number of traders live out the evolution, where they are first looking for the Holy Grail, trying every trading strategy, indicators, and much more, then they give up or start simplifying their trading habits. I like to recall the analogy of traders working on trading floors at stock exchanges: do you really think those gentlemen pay attention to Stochastics, MACD, Elliott waves or other indicators? Obviously not, they know how to read the tape or the price, they mostly trade the real price action, and we can give up all the indicators and learn to trade the net price movement in the market.
4. Professionals trust their brains rather than advisers or trading robots
I’m sure that plenty of you have had a seduction to purchase one of the sweetly described trading robots. But why don’t the guys that sell you these fire damps tell you that it is only a program that repeats its actions again and again, they are not flexible at all and the results shown to you on the websites are most likely embellished or the best periods of market history are selected.
In fact, on the market there are rises and falls, and no computer can efficiently trade as a person in a long period of time. You need freedom of action and mind to focus on the efficiency of the market in the long run. Until we have a real artificial intellect, human intelligence is the best all-time trading tool.
5. Professionals are not strongly focused on the fundamental analysis
Although there are professional traders using fundamental data in their trading, I can assure you that the majority does not do it. Those who use fundamental data are interested in it the most, because they use it as supporting factors to what they see on the chart. In fact, there is no significant reason to rely on the news and fundamental data in trading, as all these variables are accounted for in price and are displayed on the chart.
Of course, you must be in the picture as for the most volatile news, such as the Non-Farm Payrolls publication or interest rates of central banks, but only with the purpose to tighten stops or take profits. There is really no need to analyze the data deeply. If you want to see the effect news and publication of economic data make, just look at the price movement, because all the alternates are reflected ultimately in the market price, thus, when you study to trade the price movements, you will also learn how to indirectly trade anything affecting the price.
6. Professionals heed themselves but not the others
Has anyone ever entered the market with the information uttered by some “experts” on CNBC? I bet, at least someone has. I also have done it before, at the beginning of my trading days. But the funniest thing in the economic information channels is that you do not have to search long for the opposite view of another “expert”.
If you read the views of these people long enough, it is easy to get a headache, make stupid deals, or just decide that all these views are wrong. The second usually is the best option. The fact is, you must have your own opinion in trading, and remember that no one else, except you, ever cares about your money more than you do, so do not follow the advice of “experts” if you instinctively feel that this is incorrect.
Trust what the charts tell you, rather than what the talking heads on TV prophesying. Professionals are confident in their skills, and do not let any other people make trading decisions for them or influence them. Take with a grain of salt anything that you hear from the “experts”.
7. Professionals are realists
You will hardly ever become a professional trader, if you are not realistic in relation to trade. What does “realistic in relation to trade” mean? You will not earn a full salary on the market, starting from the account of $ 5000.
You must determine how much money you are willing to trade today, and then determine the dollar amount comfortable to you, which you can lose in any transaction, and then set the corresponding position size. You have to be realistic and disciplined before you become professional traders. In fact, you should act as if you are already a professional trader, before you really become one.
8. Professionals possess a well advanced commercial thinking
As we already discussed in the 4th paragraph, people have every opportunity to be better traders than the PCs, because we are able to use large discretion. There is a thing called trading instinct, which belongs to the best traders. It comes after some time, training, and practice.
Price action is a discretionary and flexible trading method that means not every pin bar or another setup is necessary to trade. On the contrary, we trade only those that correspond to the criteria of our trading plan and look right. The way one or another trading setup looks depends on your ability to discretionary trading. In the end, you will develop your thinking until you know whether a particular setup is worthy or not, just running your eye over the charts. You will need to use your commercial thinking to decide which trade setups to trade and which to skip.
9. Professionals avoid the “pressure” and “need” of making money
Everything described in this article states that you should not become emotional when trading, this is the most primary factor that enables professional traders to earn money. When one feels the need to earn money via trading to be happy and live a fulfilling life, he will certainly attach great importance to this.
Most of those who stand out in trading do not put all their eggs in one basket, and they will not become homeless if they fail to earn money in the market. In fact, you should be in a life position where you’re happy already and you have a fallback plan if you turn out to be a would-have-been trader, this will increase your chances to become a prosperous trader. If you are going through too much pressure and force yourself to win every deal, the entire trading process will simply turn into a messy loss process.
10. Professionals are disciplined and organized
You must be well-organized and disciplined in order to create and maintain the correct trading mindset. With a trading plan at your command and a trade journal and, of course, their use, it is possible to find the correct way of converting into an organized and profitable trader.
Traders, who believe they don’t need to be disciplined and organized, tend to behave this way because of arrogance. This arrogance leads them to the downfall in the market. When your hard-earned money is in the work, you should not think: “I’ll do the creation of a trading plan and conducting a trade journal later”. You must do this before you start trading.
11. Professionals use only free capital
This item refers to usual “retail” traders (not investment bankers and hedge funds). What is spare capital? The main thing is that you do not need this money for all your living needs or for retirement or something like that.
If you are trading really free money, then you will not be overly dependent on each transaction, and as a result will not become emotional, in contrast to what can happen if you really need this money for something. The best way to start trading without emotions is to use 100% spare capital. So there is no need to pledge your house or borrow money for trading, usually this becomes a serious mistake that often leads to the bitter end.
12. Professionals trade with simple strategies
At the end I want to say that many beginners and those struggling traders are surprised when they find out that trading strategies used by professional traders are really simple. Pros know that such a simple strategy as “price action” is the best one, because they do not need to analyze a large number of variables beside a pure price chart. They are also well informed that simple trading strategies operate for a simple and pure thinking, and their own thinking is the most important factor in the market. Trading is simple.
That’s all for now. Got any questions? Just ask the expert!