We had a question in one of our webinars last week that I thought was a really great question so I wanted to share the answer for that question in a video so that everybody in the terminal can benefit from it.
The question was what things someone needed to become a professional trader or to become as good as a professional trader? So, thanks for this question firstly.
So, even though I think there is a combination of multiple things that you need, I do think there are three things that really stand out for me as being the most important to your success as a trader. The first one is often not what most retail traders wants to hear, and that’s time. You need time to become as good as the professionals, and this isn’t just for trading but it’s also true for any other profession out there, whether it’s a doctor or lawyer or pharmacist or builder or plumber or accountant, you don’t walk into a new job like that and in three months you are operating at the same level of excellence and skill and expertise than those professionals who have been doing it for a few years.
So, the first thing that you’ll need is time. The one thing that you don’t want to do is trying to rush your development as a trader and miss out on valuable and important lessons along the way just because you are trying to do it as fast as you can. There is obviously nothing wrong with having some ambition and setting some targets for yourself, but majority of the retail trading community has been lied to. They’ve been lied to by so-called gurus who have sold them on this idea that you can make endless amounts of money just by taking a quick 2-day or even few weeks course and then you have all you need to trade like a pro, it’s just not true I’m afraid, it takes time.
That doesn’t mean it gives you an excuse to be lazy in your development of course, don’t get me wrong I have gone through the process of becoming an analyst a lot quicker than would usually be the case, but that’s because I sacrificed plenty of very long nights and weekends and holidays and really applied all my available time to learning as much as I could as fast as I could. There were times when I would work a regular 10 or 12 hour day and then sit down after getting home until 2 or 3 in the morning, go to sleep get up with 3 or 4 hours sleep and then do it all over again. So, it’s possible to cut your learning curve by having access to the right information at the right time and by putting in additional time, but even then, it will take time.
The second thing you’ll need is adequate knowledge, on both the fundamental and the technical side. I’d say the split is arguably going to be 80% favoured towards the fundamentals as the technicals are often very simple to grasp and apply. If you really want to trade better you’ll need to put in the effort to sharpen your knowledge. As a reference guide, we’ve been building out a full video library in the terminal for exactly this purpose, which is a good starting point for learning the fundamentals. But the other area which is a great way to learn is inside the terminal when something hits the wires that you don’t understand, maybe someone tweets something and you see it has a reaction in the market, find out why that happened, get into the habit of doing additional research on why the market is moving in certain ways so that you can use that knowledge to take advantage of similar opportunities in future.
Your learning and ongoing development is something that will be able to set you apart from the vast majority of retail traders out there because the bulk doesn’t know the inner workings of things like cross-asset class correlations, why rising inflation expectations are important, why real yields are important, why interest rate differentials are important, why unconventional monetary policy is important, why decelerating or accelerating growth and inflation is important, and apart from that, how to use all of these things in your trading. So, make a habit of being curious and learning as much as you can, just like you would in any other profession.
The third thing you need is the right attitude. And I know this sounds so cliché and to be fair it is a word that has been used way too much as a umbrella for way too many things, but with attitude I’m talking about the mental fortitude to identify psychological issues that you are struggling with as a trader and having the motivation to sort those issues out. You see, after you’ve gotten the basics under your belt, trading really does become a psychological journey, being able to progress comes down to your willingness to sort yourself out, being disciplined enough to trade when you should and to stop when you shouldn’t, to be mindful of your own flaws. There are some many traders that blame the market for their losses, the market did this or the market did that, but at the end of the day you are your own worst enemy in trading.
It’s not the market that is out there to get you, the market couldn’t care less. It comes down to how you manage yourself, your emotions.
So, I would say, those are the three things I would place on the highest of the list in terms of trading like the pros, hope that helps, and as usual any other questions just let us know.