What Makes a Professional Trader?
How do you define a professional trader? A professional is someone who does something successfully for a living. Professional engineers build things for a living. Professional writers write. Professional gamblers play cards—and win consistently. Professional traders trade, and make money reliably enough that they can call trading their full- or part-time job.
One of the things that appeals to newbie traders about binary options is how easy it is to get started. You do not have to be a professional trader with years of experience at a trading firm to start trading binary options. In fact, all you really need is a computer with a high speed internet connection, about $200, and the desire to trade. If you have those three things, there is nothing stopping you from depositing your money with a broker and getting started right now.
But there is an important question you need to ask yourself before you do, which is this: Do I want to become a professional trader? If the answer is no, and you are just trading for fun, then you really have nothing further to think about. If however the answer is yes, and you would love to do nothing more than to trade binary options for a living, you have a lot more work ahead of you and a lot more to consider.
To become a professional trader, someone who can win consistently enough to make a reliable income, you need to start thinking and behaving like a professional now. And in that sense, there are two definitions of the word professional. A professional trader is fundamentally someone who trades for a living—but you can also define a professional trader as someone who treats trading like a business and exhibits all the behaviors of a professional trader. That person is on the road to becoming one.
5 Traits of a Professional Binary Options Trader
- Flexibility in tough times.
There is nothing wrong with having a few favorite assets that you stick to because you find them predictable and reliable. There are always going to be times however when the assets you want to trade are suffering from choppy conditions. There is a tendency for small retail traders to do one of two things in this situation. Either they will stop trading until things change in their favor, or they will try to take trades they shouldn’t while still working with their preferred assets. Professional traders will generally be flexible enough to follow the opportunity and trade a different asset. You need to have a method for identifying prime opportunities, and you need to do your testing, but flexibility is a must for any professional.
- Only trade fundamentals if they know them.
Newbie traders often make the mistake of thinking that fundamental analysis is a lot simpler than it really is. Economics around the world is a complex topic, and to know it inside and out takes years of training. If you are not a financial expert, it is best to avoid fundamental analysis and stick with something a little more focused. If you do want to become a fundamental analysis trader, you need to really learn your stuff. Click here for other newbie mistakes.
- Manage risk wisely.
Professional traders always manage their risk well. In fact, at trading firms, there are employees called risk managers whose entire job revolves around ensuring that none of the firm’s traders are risking more than they ought to on their trades. When you are trading by yourself, there is nobody to do this job for you—except yourself. You need to make sure that you are trading a consistent, small amount of capital on each trade. And by small, I do mean small. Try to stay with about 3% per trade. Professional traders do not risk 10% or more on their trades like many newbie binary options traders do.
Likewise, you are going to want to aim for reasonable profit goals. Not many professional traders at trading firms ever talk about how they are planning on quadrupling the size of their account within a year, or making their first million within three. Professional traders plan to make small, reliable profits that they can repeat, and to lose as little money as possible. This method may sound dull, but it works. If you are desperate to make the big bucks overnight, you will take foolish risks in the process and end up losing everything.
- Have a trading plan and follow it.
You need to have a trading plan if you are going to trade like a professional, and maybe even become one day. A random approach to binary options will result in nothing but random results. That means some wins and more losses. To get in the game and stay in it, you have to have a plan which includes a method for entering and exiting trades, a trading schedule, goals, a checklist to help you stay on track, and more. The best trading plans are very detailed, but succinct enough that you can read yours daily. Traders who think they can just use their gut instinct and win will never be destined for professional success at binary options. This is nothing more than spinning a roulette wheel and praying that you will make it. And while there are professional gamblers out there, they are professional card players. None of them are pros at roulette.
- Get to know their own strengths and weaknesses.
Your trading plan is an essential tool in achieving success, but it does not stand on its own. Think about it. If it did, you would not have to become a trader at all. You could just program a computer to do it all for you. Auto-trading does exist, but it does not create a professional trader. You must be involved in the work of trading, and you must also learn about yourself in the process. At all times, you are at the center of your trading activities. And it isn’t just enough to learn the basics of trading psychology. You need to learn what your personal strengths and weaknesses are. How can you hone and leverage your strengths to help you succeed? How can you plan to overcome or work around your weaknesses?
People who become experts in their fields are never simply following a set of rules. In trading, the rules are very important—more important by far than they are in most fields. This is because you are working with something that involves chaos and risk on a day-to-day basis, and the rules help you to navigate that chaos and create order. Order helps you pull in consistent profits. But experts in any field, including trading, learn to treat their craft like something fluid and alive, something that changes as the times change and as they themselves change. They find their inner strengths and bring them to the surface, and allow their strengths to direct them. They never become complacent, and they are always looking for ways to become better at what they do.
When you unite your personal strengths with an enhanced trading plan and the flexibility to know when to change, you are using the best type of leverage out there. Leveraging your own power in a positive way is much different from using the kind of leverage offered to you by brokers in the form of bonuses. This type doesn’t ruin your money management plan or throw you out of the game. It is simply the choice to take the fullest advantage of all the assets already on your side.
Professionalism Is All In Your Approach
You may not be able to say that you are a professional trader until you are actually making consistent money trading, so that it becomes part of your income, but you can say that you trade with a professional approach and treat your trading as a business right from the start—long before you even place your first trade. If you mimic the behavior of professional traders, and you make smart choices about your trading, you pull yourself out of the bulk of amateur traders who will never have a shot at real riches. Real riches do not manifest overnight. They are the result of hard work, and years of dedicated, smart binary options trading. Trade like a professional now, and you have a chance at becoming one later.