Trading is a profession just like any other sport or degree where you have to begin learning in steps. The common belief that you can succeed in trading is a hoax, landing traders in losers’ pitfall.
It requires months or even years of analyzing and hard work to develop a good amount of consistency. Each stage of the process presents new and different challenges one must overcome. Our article will highlight every professional trader’s journey and include all the hurdles he/she faces on the road to success.
This is where all the destruction happens, as most traders fail in the initial stages of their trading. New investors who are just getting their feet wet are a primary target for scammers and fraud prevalent in the industry. Forex and stocks social media pages on Instagram, Facebook, and WhatsApp, show luxury cars and jets owned by traders who try to attract novices in their game. Account management scams, signal services, indicators, and automated software are usually offered with a promise of huge returns. As a novice trader, you will certainly give in to these unless you have someone authentic to guide you.
As a beginner trader, a person tries to find sources that can provide him or her with good knowledge and information. Trading mentors are generally looked out for who typically demand hundreds and thousands of dollars for their services. Free websites are also available, but there is a struggle getting out the right stuff.
Even after learning the essential trading components, novice traders struggle with managing their risk, mindset, and strategy. At this point in their trading, they lose most of their trades and struggle to make it breakeven. Trading capital may also possess some hindrances.
After going through the complex yet simple process, a beginner advances to become an amateur trader. The duration of this transition can take months. With the proper guidance, one can indeed move on the ladder at a much quicker pace.
On reaching the amateur level, a trader will start seeing good profitable trades now and then. He will enter the breakeven point where there is no loss or gain and move towards making profits. They are not liable to potential scammers as they understand that the only way to profit is by obtaining a proper skill set and adhering to certain rules. Some intermediate investors may still search for the best indicator on google; however, after backtesting, they realize there is no such thing that delivers 100% winning probability.
Some differences set amateur traders apart from the professionals, including distractions, wasting time, poor psychology, etc. Procrastination is one of the key killers of their careers, though. Intermediate investors are not entirely free from entering the losing trades. It is highly likely for them to lose their edge in the process. If you are operating as an amateur, make sure that you do not overcomplicate your trading as there is too much knowledge to pay attention to.
To solve the problem of having a fair amount of equity in their portfolio, amateur traders usually swarm proprietary trading companies. Prop firms aid them out by imposing strict rules that help transform intermediaries into professionals.
The seeds have ripened, and a top-class trader takes its birth who adheres to his rigorous trading methodology and has top tools and low fees at his disposal. A professional trader’s vision is at a much different level than that of an amateur or a novice – he or she manages a considerable amount of capital provided by a prop firm, bank, or hedge fund. Through excellent risk management, psychology, and game plan, a pro trader can grab 5-20% of the initial portfolio equity.
As soon as you become a professional, you would want to diversify the trading capital into different assets. Bonds, mutual funds, ETFs, and hedge funds are popular choices amongst investors of this class. Most of the trading gurus are pro-market participants who have sharpened their skillset over several years.
How much time can it take for you to become a pro trader?
The answer to this question lies in the abilities and the hard work you are willing to put in each day. Having talent is a side story here, as the major winners are those that put in extra hours in analyzing and journaling their trades. The top proprietary firms on wall street demand their traders show up at least an hour before the market opens for necessary preparations. Indeed, those investors will complete their journey in a much shorter time than those who prefer to sleep.
Essential steps to take for becoming a professional trader
Let us take a few steps that you can follow to ensure that your path to the destination becomes smooth and quick:
- Learn basics. Take a deep note of order types, available instruments, risk management, psychology, performance monitoring, required capital, and game plan.
- Learn advanced stuff. Dive into much complex information for stocks: earnings per share, dividends, bid, ask, level two data, etc.
- Trading system. Have a sound system at your disposal with two screens to analyze the charts quickly if you’re a technical trader.
- Demo trading. Utilize paper trading systems to backtest your strategies. You can also use trading simulators that mimic actual market conditions for faster testing.
- Mentor. A good trading guru can reduce the learning time by a considerable margin. He can highlight all of your mistakes and provide good feedback.