Being a Professional Trader
Differences between professional traders and non-professionals
- Professional traders donít watch the big news stories. They don't care that Google bought YouTube. They don't sit around pontificating about Facebook's valuation. They are busy looking at the future. News stories are for people looking to engage in "business gossip" by talking about what happened yesterday.
- Professional traders don't read message boards.
- Professional traders don't talk about stocks. This is for a few reasons. First, they don't want inferior traders to contaminate their mind about a stock. Another reason is that amateur traders mostly talk about stocks in order to make themselves feel better about their trades.
- Professional traders don't rely on gurus. Professional traders rely on their own personal strategies and systems which they have developed after years of work. They don't constantly skip around different web sites and magazines in order to seek out new ideas. They don't need to rely on outside sources, and don't need to relinquish control. This isn't to say that they may not occasionally find an interesting article on Motley Fool or something where they decide to buy the stock. But, after reading the article, they still make up their own minds using their own criteria and judgment.
One of the best things about being a self-employed trader is the ability to take breaks. Although this may seem like an obvious and non-material advantage, this wouldn't be something you would be able to do if you were a professional money manager. The freedom to take breaks will give you a lot more flexibility with regard to your evolution as a trader. Not only will you be able to take short-term breaks, but you will be able to take long-term breaks if you decide that you want to completely reconstruct your investment techniques.
Sometimes your breaks will be based on external events in your personal life (emergencies, travel, etc.), but sometimes the need to take breaks will be based on trading itself. For example, you may be trading full-time for years at a time and your brain becomes fried from constant analysis. Or you may want to take time off and recover after a large loss.
One of the hardest things about taking breaks is realizing that there will be times where you are better off by taking time off for a while. At most jobs, whether self-employed or working for someone else, the instinct in most people is to carry forward even when you can't give 100%. This is based on the obvious belief that a 50% effort is better than a 0% effort. But with trading, you will need to reprogram your mind to understand that if you can't give 100% then you should take a break - and that giving less than 100% can lead to losses when you are taking risks. A possible exception to this rule would be systems traders who are able to put their systems on autopilot. Being that I am not
a systems trader, I am not sure if this is true or not, but it might be.