Retail Traders vs. Professional Traders: What's The Difference?

Standing on the NYSE Trading Floor years ago toward the end of the trading day, I observed the best floor traders in the world. It was extremely rare for an outsider to be allowed on the floor during business hours or even after hours. I watched the traders intently.

Each professional had their own station and their own unique and proprietary trading system, technical analysis methods, indicators, etc. Each professional was totally focused on his trading. No floor trader spoke or even acknowledged the presence of another. There were perhaps 100 traders on the floor that day, all working with their Market Makers. There was no shouting, no discussions, no stopping to chat with each other. It was all strictly business.

I visited many retail traders’ groups over the 25 years my company has offered professional-level education to retail traders who seek to join the exclusive ranks of high-income semi-professional to full senior-level professional traders.  

The retail trading groups were talkative, there was always a leader in the group who was not a credentialed professional. This can be very dangerous to retail traders who are depending upon the leader for advice and stock recommendations. Also, group consensus leads to “cluster orders” which HFTs and professional traders trade against, causing whipsaw action and bigger losses for that retail chatroom group. Without a certified, SEC-approved professional in the group, trading decisions spread rapidly and then the entire group takes a loss. Without an expert who has taken professional exams and has credentials to teach, the chatroom traders place themselves at much higher risk of loss and often margin calls.

When I teach, I treat each student as if they will become an expert, high-level senior trader, either working for an Institution OR as an Independent Semi to Professional-level trader. 

Professional Traders do not share. They do not chat or talk to anyone during trading hours. They have their own Trading Parameters and technical tools, which they have modified to give them an edge.  TechniTrader provides tools for student traders and encourages them to modify the tools to their own specific needs and goals. That way each student is capable of having the ideal tools, scans and setups for how they wish to trade.

Chatrooms of retail traders are common but I have never seen any that actually have high success rates and high profit for the individuals in the group. What happens is a “follow the leader” mentality that thwarts individuality rather than promoting and encouraging individuality.

Professional Traders have a very high success rate of around 90% because they trade without influence or interference from other traders, retail news, or other distractions. The professional trader has the ability to tune out every distraction and make rapid, accurate decisions without asking for another trader’s approval.

Learning to Trade like a professional requires learning the skills of making decisions on your own without any encouragement from a chatroom group. However, the difference in income potential is, for most retail traders, a huge shock. A new TechniTrader student learns to rely upon his or her own judgment and decision-making skills.

Trading is first and foremost A SKILL. It is not retail news feeds or recommendation services, or a group consensus that one stock is the stock to trade that day. Nor is it trying to find something or someone to blame for a loss.

When a professional has a loss, he or she will review the entire trade, identify the problem and then ensure they do not repeat it.

When TechniTrader students are in the learning mode, if they have a simulator trading loss as they are learning and developing their skills, they are taught to do the same thing a professional does: evaluate and study the trade to identify the mistake, learn from it and move on.

This training is not available within a retail chatroom or retail guru trading group. Instead of determining the mistake, the group prefers to place blame somewhere else. This hampers the retail trader who is trying to succeed because they never learn why a trade did not move in the direction they expected.

It can be hard to give up the chatroom environment, but being able to make decisions independently and develop skills way beyond the average retail trader is a huge bonus.

While anyone with the willingness to learn can do it, trading like a Professional is not for everyone. It requires a professional-level education aimed at building a unique rules-based trading routine with checks and balances that lead to a high success rate. Retail traders who are determined to learn a complete methodology for executing their own trading plan without deviation can earn a high income with practice and guidance from a credentialed source. 

Martha Stokes, CMT

https://www.technitrader.courses 

Image sourced from Shutterstock

This post was authored by an external contributor and does not represent Benzinga's opinions and has not been edited for content. This contains sponsored content and is for informational purposes only and not intended to be investing advice.