A beginner trader vs pro trader

A beginner trader when buy/sell, as soon has he gets few pips profit he wants to take it. If it goes against him, he hopes and believe it will come back. Some time it comes back and he believes in it now. Next time it goes more and more , he adds one more .. and more and more.. so at one point either he got margin call or he cuts it as big loss.
I always think, is that possible that a trader can do exactly opposite of new trader? I mean can one take trade and quickly cut it if it is loss and let it run if it is in profit.
And add more and more and more once it is in profit?

As my understanding and IMHO, the entry system (buy/sell and exit rules only) is only 15% of the trading system. The major parts are money management and trade management. What do you think?

A pro trader waits his setup, he would miss the trader rather than take a trade which is missing only one of his criteria. He would try to run his profits longer and try to cut losses in short... Do you guys agree?

Please feel free to comment freely.

In my opinion, the major difference between a pro's trade and a beginner's/enthusiast's/hobbyist's trade is that the former is one of a whole series of trades which are collectively proven and therefore confidently known to have a genuine edge (positive net expectation).



IMHO it's nothing like so high as that.

I think successful, consistent trading is typically about 60% money-management, 30% psychology, 8% trade-management (including stop-losses and exits) and 2% entries.

Just my perspective.

Well said, trading doesn't begin for real until this is realised, then once you can automate a proven process trading becomes completely emotionless, and residual.

The big difference between a new trader and an experienced one is the more experienced traders don't feel any emotions in the market, they simply execute and allow their edge to play out over time. There is nothing else out there that can give you an edge like trading can, you just have to go out there, put in the study and discipline to formulate your own trading process with an edge and then be rewarded for all that effort as the execution is carried out.

Very well said. Thanks for your input.
One thing I could not understand. Why it is easy for a new trader to grow the losses bigger and bigger than the profits. Is it a human nature?

yes, just like a gambler, becuz a new trasder doesnt understand probabilities and odds of the game ( we were all new traders at one point)

Example, new trader follows an indicator or some strategy. Price moves against him, he says how could this be ? the strategy told me its gonna come back, ok Im gonna double up, moves against him even more strategy says its gonna reverse again..........but it doesnt hahaha.

Veteran Trader- has many tools in his tool box, understands how the market moves watches price movement where the strength is, places a long term forecast on his analysis, sets up the trade to cover all aspects of the market moving against him, with him or in a hovering state.

If the trade moves against him, he closes the position and waits for the next setup, he doesnt think twice about. Removes all emotion!!!!

Very good description - I definitely agree with this.



I don't know. I completely lack insight into anything like this: I always feel slightly embarrassed or tongue-in-cheek saying that trading's 60% money-management, 30% psychology, 8% trade-management, SL's and exits, and 2% entries, because (although I do believe it) I'm saying it only from observation and reactions to the comments of other traders I know who've become successful. The truth is that I lack most of the 30% part, myself, because I'm really Asperger-ish and have no emotional or human nature insight to speak of (a "handicap" that I think has actually been an advantage to me, for trading, because as a side-benefit I also have no emotional attachment to individual outcomes at all). But I like to say it anyway, albeit perhaps mostly to make the point that "entries" (which seem to occupy a disproportionately huge proportion of trading chat) are actually a really tiny component of long-term, successful trading (a reality which it took me a very long time to learn).

Because Rookies enter the market with a desire of not loosing money,when in reality trading is about loosing money occasionally.
Every trading plan that beginners make starts with deciding to enter the market with subconscious intent to come out as a winner,they don't like to loose,so when the trade goes wrong they avoid the pain,of the loss.
The day the trader embraces the loss as part of the game and walks off the play field when their edge no longer exists or isn't present,is the day trader becomes consistent.
I support xela's belief about the edge and it's importance.
I disagree with xela about trade management only constituting a mere 8 percent to the overall skill set of a trader.

Active trade management can protect and conserve equity ,trade management is not just about when to take profit/loss, it is about being aware and reacting(managing) to the overall changes that market present with every passing second.

I can choose the right position size and have an edge but react inappropriately ,manage trade like a rookie, then i will loose money in the long run.

Edge is about positive expectancy ,and knowing that particular situation will always bring consistent profit,but it does not involve adaptation to minute changes as they present themselves in the market,adaptation and management part takes over once you are in the market,
Once you are sidelined once again ,edge part takes over.The waiting game.
I think definition of edge is subjective,some may consider active adaptation as a part of an edge.some don't.I don't,so i said it.

Some think a good trader that has an edge will know active management. duhh

But if we are breaking it down into parts,then i will say edge is when you enter,more associated with logical part of your brain,based on what worked ,what didn't.
Active intervention and trade management is when you are in the market with an entry.the emotions kick in then. so it is another part.

But the breaking it down into parts and deciding what is important and what not depends on individual beliefs.

Consider two traders:
Trader A is beginner

He trades the 4 hourly chart,he enters based on 4 hour bars with big stop loss of 40- 60 pips.
Once inside the trade he either takes a loss of full stop loss or takes a profit.

Trader B is experienced
He trade the 4 hour charts he know that he has edge in his method,he sets stop loss 40-60 pips.
He actively evaluates the 1 hourly scans for changes that reduce his edge then takes a small loss of 20 pips if setup is showing negative signs,
He is an active trader.
For trader B cutting losses early means the difference in spotting trend change earlier then trader A,who is not an active trader.

Edge is only positive expectancy but sure as hell even pros know that even with an edge you can still be wrong about market conditions.
So Active management comprises a good part of the skill set of a good trader.

Hope this helps.

You are a professional trader until all your money is lost.
It can take 3 days or 20 years, but it always ends the same way.. unless you "diversify" either via OPM (then you are a professional trader until THEIR money is lost) or via selling some trading related goods and services, or both...
Then you can enjoy yourself like this:

http://www.mirror.co.uk/news/uk-news...raders-5262538

http://www.dailymail.co.uk/news/arti...ratically.html

(:

I think it's just a beginning trader emotions take its decision without any analysis of who mutually agree and wish her luck siding. I am just a beginner who just a week to learn about the forex market. piss

Oh this is a simple one! The only difference between the two is that a Pro Trader made money when he quits trading.

Heard this from a friend, not sure how true it is but he said you shouldn't jump around from pair to another. Stick to one currency pair until you're a PhD in that particular pair and that's when you'll start making money

A pro trader is willing to loose everything to succeed.
And has already overcame that obstacle

knows when not to take a trade, for a better entry, experience learned from screentime. takes profit, however small (day trading)

For me the difference is in knowing when to turn to different weapons in your arsenal. Being more technical or relying on your gut.. making more trades to scalp a good formation, staying the course or not entering at all.

Traders remind me of singers. Everyone can do it, but only a few have any success. It takes talent. practice, and commitment.

Watching candle movement for me, increases stress and anxiety. So, I created a mathematical relationship to price movement through indicators, and blacked out the candles. It requires me to trust my math, not some jumpy candle or my intuition. When the math distinguishes a change in direction, I reverse my trade. Simple. You just need to find something you trust and then ignore all the other garbage.

There are areas of trading intentionally designed to fool you. Head fakes, double tops/bottoms, stop hunts before major news, and consolidation. This is beyond your control, so understand your limits. Your indicator needs to either trade you through the problems, have you exit the problems, or be incapable of trading those areas and cause you to exit and wait it out. There is no money to be made in any of those situations, so why attempt to trade them? Jump over it, ride it out, or sit it out.

Never take a loss personal and always be willing to use your stop. Often, but not always, if you stop the trade and reverse your position, rather than being stupid and holding on to the loss, you will actually make enough money when the reverse trade ends to cover the loss and still have profit. Before I begin trading each day, I read from a list of my "must do"s and one of them is, "Do I want to feel smart, or do I want to make money"? Trading with math takes away the personal ego aspect. If you know anything about sports, you know leads change all the time. Should you just quit when the other team has the ball? No, you are on defense at that time. Same in trading. If it turns against you, you go on defense, and wait until you can be back on offense. I trade against the market equilibrium, so if the market is in a straight line cycle, I am entering and exiting at a break even point. I know this will happen, so there is absolutely no reason to not exit. It is a business, not a completion. I know that sooner or later a move will occur that will not cycle, but I cannot know which one, so I must keep entering and exiting until it occurs. If I let my ego dictate me a loser because the move didn't start yet, then how would I ever make any money? It is just how the game is played.

When you trust your math, instead of yourself, you will stop exiting too early. If you cannot trust the math, then you must do one of two things. Either develop an exit signal, or develop a better entry signal. You can, if you try, create an entry that is also your exit. That is what I did. I wanted it super simple so I could trade multiple pairs without overexerting myself. I exit on high impact news. Otherwise, I am in the market. Occasionally, because I can see it coming, I will exit during consolidation and use a stronger signal for my next entry that normally occurs when it is over. It isn't hard unless you make it hard. Good Luck

That is so well said that I have to post specifically to say:

That is well said.

Read that two times, four times, put it on your wall even and read it every single day for a year. Then maybe you will be able to learn it the easy way rather than the hard way - through hundreds upon hundreds of mistakes and losses

I gravely disagree. One pair only gives you 1 window into the nature of the market. The more you see the more you learn, especially over the first 2-3 years.

Of course, this only applies if you're working on the 4h or higher timeframes. Where you should be if you're having difficulties. If you try to obsess over the 30 minute or lower timeframes you will lose consistently and give up in no time

Very nice thread, nice one guys.