8 Difference Between Pros And Amateurs In Day Trading

It doesn’t matter how long you’ve been trading; there is always room to improve your approach and become a more profitable trader. To be a successful day trader, you need to learn what the pros do, implement their tools into your methods, and constantly be willing to improve your strategy.

1. Have a strategy.
This may seem simple but almost all amateurs trade purely based on emotion, gut feeling, or tips from their friends. Maybe they even have a trading strategy, but for some reason they still don’t follow it. Pros always stick to their strategy under any circumstance.

2. Stick to the strategy like a robot.
Pros always follow their strategy because they realise that reliable data is more valuable than trying to get lucky on big traders here and there. Even if they aren’t confident in a trade, they realise that they created the strategy for a reason, based on historical market data, when they were thinking clearly, and that following their strategy will produce consistent profits long term. When you don’t follow your strategy, or you take profits early, or move stops, that invalidates all of your historical results and future results, which means you never have any reliable data you can use to improve your trading.

3. Pros don’t get emotional when trading.
When it comes to managing your emotions in trades, pros have an amazing ability to recognise how they’re feeling in the moment, and use that information to avoid taking bad trades or to improve their good trades. While amateurs tend to avoid even considering the fact they may be trading emotionally, and fail to recognise when it’s impacting their trades.

4. Pros don’t hold onto their losers.
It’s common for beginners to hold onto a trade that’s gone against them a bit. Often, they will wait for it to get at breakeven to get out – and then it continues to go down and down until eventually they’re forced to sell for a big loss, only to be left feeling like an idiot when the market does turn around. Pros, on the other hand, cut their losers early, and look for the next trade. Pros don’t get attached to any single trade and they realise there are plenty of opportunities in the future.

5. Pros let their winners run.
A common mistake of amateurs is to close their trades early and take the profit. Hey, you can’t go broke taking profits, right? Wrong! Nothing could be further from the truth. You absolutely can go broke taking profits and it’s actually a common mistake for beginner traders. When you try to avoid losses by taking profits early, it reduces your average win, and negatively impacts your risk:reward ratio which is a recipe for disaster. You need to know how to effectively set your take profits and stop losses so that you have a positive expectancy, and remain profitable long term.

6. Pros keep a trading journal.
Pros track literally every aspect of their trading. They want statistics on everything so they can fine tune their trading approach based on any little statistic that is lagging. They want detailed statistics on winrate, average win, average loss, expectancy, trades per day, winrate based on time of the day or day of the week. They’re going to track literally everything they could possibly use to give themselves an advantage.

7. Pros constantly study the market.
Besides keeping an eye on things like technical indicators, pros will always spend time looking at the news, their trade journals, studying books and anything else they can get that improves their trading knowledge and performance.

Pros always want to get smarter, but that’s not to say that they spend all their time studying - one of the reasons we day trade is for freedom to live life on our terms. But that doesn’t mean we should set aside some time every day for study.

8. Pros have realistic expectations.
Pretty much every beginner comes into day trading with the expectation of being able to double, triple, or even quadruple their money in a matter of weeks. With this goal in mind there is literally no other option than for them to trade with unlimited risk. Pros realise what kinds of returns they can actually expect as a day trader - and most of the time it’s a lot less than doubling your money every year.

Day trading is a long game, and results never come overnight. To be successful in this field you should be consistently looking to improve your approach in every aspect.

I hope you found this guide helpful and it serves as a reminder to keep working hard to reach your goals.

Happy trading!