9 Things Professional Traders Do That Losers Don’t 

Last Updated: June 18, 2021

By Rayner

Do you know what separates professional traders from losing traders?

Discipline?

Trading strategy?

Risk management?

Well, turns out there are 9 things winning traders do that losers don’t.

So, if you do these 9 things I’m about to share with you, then you’ll have what it takes to be in the top 5% of traders.

Are you ready?

Then let’s get started…

#1: Think independently

One of the reasons why most traders fail is because they ask questions like these…

  • Is exponential or simple moving average better?
  • Should I buy Tesla stock right now or wait for a pullback?
  • What is the best RSI setting?

You’re probably wondering:

“What’s wrong with it?”

Well, it’s a sign you cannot think independently. It shows you want to be spoon-fed so you can skip the “work” and go straight to profits.

Unfortunately, it doesn’t work that way.

Why?

Because in trading, there’s no such thing as “best”.

What’s “best” for me might not be right for you because of our different goals, timeframe, personality, etc.

So…

If you want to succeed in trading (or in business), you must have the ability to think independently.

So instead of asking “what” or “when” questions, learn to ask…

Why.

This means you want to ask questions like:

  • Why did he apply this trading strategy only on the stock markets and not FX?
  • Why did he use a 200-day moving average as a trend filter?
  • Why did he use a 40% trailing stop loss?

Do you see the difference?

By asking why questions, you’ll come up with a hypothesis to your questions—and this brings me to my next point…

#2: Willing to get your hands dirty

Now:

Just because you came up with a hypothesis to your question, doesn’t mean it’s correct.

That’s why as a professional trader, it’s your job to validate your trading ideas (or hypothesis).

You’ve got to get your hands dirty and do the work like backtesting, forward testing, etc.

For example, you might wonder:

“Is a 10-week breakout better than a 50-week breakout in terms of returns relative to risk?”

Well, to find out you can do a backtest across a universe of stocks using these two parameters, and see which offers a better result.

To make your life easier, here are some tools you can use for backtesting…

Amibroker – A backtesting platform

Norgate Data – Data feed

Upwork – A market place to find programmers

Still, most of you won’t do it because it’s easier to solicit an opinion than to actually do the work.

The problem is, you’ll never know if it’s true, or not—that’s why you must be willing to get your hands dirty and do the work!

Pro Tip:

If you want to learn how to backtest your trading strategy without coding, then check out The Essential Guide To Systems Trading.

#3: Have the right expectations

Most new traders enter this business with the wrong expectations about trading.

They want to:

  • Make a profit every single day.
  • Learn a simple chart pattern that can rake massive profits with low risk.
  • Take a small trading account and grow it to 7-figures within a few months.

Is it possible?

Yes, but only if you’re “lucky”.

Because 99% of traders who attempt it either blow up their accounts or quit trading altogether.

Now if you’re serious about trading then you must have the right expectations.

So here’s what to expect…

#1: You won’t make money every day

Here’s the thing:

A trading strategy seeks to exploit certain market conditions in order to profit from it.

(For example, Trend Following makes money when many markets are trending together.)

But as you know, the markets are always changing. One moment it could be trending, the next, it could be ranging.

In other words, you’ll make money when market conditions are favourable to you.

When it isn’t, your trading strategy will lose money—which explains why you won’t make money every day (as market conditions change).

#2: The truth about growing a small account fast (that nobody tells you)

It’s easy to grow a small trading account.

Want to take a $500 and double it within 2 days?

Want to make 50% a week?

It’s easy because all you need to do is risk a huge % of your account on each trade, and if the trade goes your way, BOOM—target achieved.

But here’s the thing…

Just because it’s easy doesn’t mean it’s feasible.

Sure, you can double your account in a few days. But, it’s also a matter of time before you give everything back to the markets, and more.

The solution?

Instead of looking for shortcuts, let time and money be on your side.

This means you’ll regularly add funds to your account and compound your returns.

If you want to learn more, then go read How To Grow A Small Trading Account.

#3: There’s a steep learning curve before profitability

I’m sure you can agree:

Professionals like lawyers, doctors, pilots, etc. spend 5 years (or more) to master their craft.

That’s why in the early years of their career, they typically don’t “see the money” as they are in the learning stage.

But when they get good at it, BOOM, the money starts rolling in—but, it doesn’t happen overnight.

And it’s the same for a professional trader!

You’ll take years to build your foundation, make mistakes, find your edge, and if you survive long enough, you can’t help but get good at it.

So, don’t come into trading thinking you can quit your day job after taking an online course—it doesn’t work that way.

There’s a steep learning curve ahead and you must be prepared for it.

You’ve been warned.

#4: Manage risk like a pro

Here’s the deal:

  • No market trends all the time.
  • No range sustains all the time.
  • No strategy works all the time.
  • That’s why you manage risk all the time!

Agree?

So now the question is…

How do you manage your risk?

Well, there are many ways to it.

Depending on your trading strategy, you can use things like stop loss, options, reduced leverage, position-sizing, etc.

(If you want to learn more, then go read The Complete Guide To Risk Management.)

The key thing is, a losing trade must be managed so that it feels like an “ant bite”—not a “shark bite” where you lose a huge chunk of capital.

#5: You must trade with an edge

You might be wondering:

“What is an edge?”

In layman’s terms, an edge is something you do repeatedly that yields a positive result.

For example:

The casino has an edge over the players because with more bets being played, the more the casino earns (in the long-run).

In mathematical terms, an edge is something that gives you a positive expectancy in the long run.

For example:

If every time you toss a coin and it comes up head, you win $2. And if it comes up tail, I lose $1.

In the long run, who will win?

You, of course!

By the way, if you want to learn a new trading system that has an edge in the markets, then check this out.

Now, this is important so I’ll repeat…

You must have an edge in the markets if you want to be a consistently profitable trader.

It doesn’t matter if you have the best trading psychology, risk management, favourable risk to reward ratio, etc.

Because without an edge, none of it matters.

Don’t believe me?

Then head down to your nearest casino.

You can bring along the best psychology, apply proper risk management, play games with favourable risk to reward, but in the long-run, you’ll still lose money.

Why?

Because the casino has a mathematical edge over you.

And it’s the same for trading!

IF you want to profit from the financial markets, then you must have an edge!

#6: Execute relentlessly

Most traders think they can start making profits after they found a winning strategy.

They tell themselves:

“All I need to do is to follow the strategy with risk management, and BOOM, profits.”

Well, that’s true in theory.

But in reality, things aren’t as simple.

Why?

Because you’ll encounter losses along the way.

Imagine:

You might have a trading strategy that makes money in the long-run.

But after 10 losses in a row, are you able to continue trading the strategy?

You’ll have thoughts like…

“Is the strategy still working?”

“What if the strategy has stopped working?”

“Should I continue trading this strategy? What if the losses pile on?”

Clearly, the right thing to do is to continue trading the strategy (since it has an edge in the markets).

But when the heat is on, it’s difficult to execute relentlessly—especially in the face of mounting losses.

So what now?

#1: Reduce position size

You’re probably familiar with the 1% risk management rule.

But that’s not the complete picture because it doesn’t state how much of your net worth is in your trading account.

For example:

If your entire net worth is in your trading account, then risking 1% on each trade is still hard to stomach.

As a guideline, have not more than 50% of your net worth in your trading account.

This way, you can sleep better at night and likely to execute your trades consistently even during a drawdown.

#2 Adopt the star system approach

When I was a 7-year old, my teacher would give me a “star sticker” whenever I put in the effort to do my homework, regardless of whether the answer is right or wrong.

In other words, she rewards effort, not the outcome.

If you think about it, this approach is highly suitable for trading.

You should reward yourself whenever you follow your trading plan regardless of whether the trade is a winning or a loser.

So here’s how the star system works…

  1. Every time you follow your plan, you get 1 star
  2. Every time you didn’t follow your plan, you get -2 stars
  3. The goal of the star system is to accumulate 100 stars

As you can see, the focus isn’t to make profits.

Rather, it’s to accumulate as many stars as possible by being consistent with your actions.

Remember, a consistent set of actions lead to a consistent set of results.

#7: Always be a student of the markets

Here’s my learning curve as a trader:

I started with indicators, then price action trading.

And for a few years, I thought that’s all I needed because after all, the price is king and that’s all I needed to be a profitable trader.

But that hurts my growth because I tuned out everything else (and limited myself only to price action trading).

When I realized my folly, I quickly went back to being a student of the markets.

So I asked myself:

“What are other winning traders doing to profit from the markets?”

That’s when I got exposed to trend following, systems trading, mean reversion trading, etc.

The outcome?

Today, I have multiple trading strategies across different markets—which results in a smoother equity curve of my portfolio.

So the lesson is this:

You might be a profitable trader but, it doesn’t mean your learning curve is over because you’re always a student of the market.

#8: Emotionally in control

Yin and yang. Cause and effect. Light and darkness.

You’re probably wondering:

“Why are you getting philosophical?”

That’s because there are always two sides to everything, including your emotions.

It’s an emotional roller coaster if you dictate how you feel based on the P&L of your trading account.

Because when you make money, you’ll be happy. And when you suffer losses, you’ll be sad.

This takes a toll on your health and it isn’t fair to your family and friends.

So tell yourself:

Don’t be too happy when you’re on a winning streak because your losses are always just around the corner.

And when you face a series of losses, it’s not the end of the world because there will be better days ahead.

I know this is easier said than done.

But when you’re in control of your emotions, your actions will be consistent—which leads to consistent trading results.

#9: Know when to stay out

Here’s the deal:

A trading strategy is built to exploit certain “patterns” in the markets.

For example, a stock trend following strategy can be used to profit in a bull market.

But in a bear market, this trading strategy will underperform as most stocks go under.

Thus, it’s important to know when to stay out of the markets when market conditions aren’t favourable, or you’ll risk losing more money.

Now you’re probably wondering:

“But how do I know when to stay out of the markets?”

That’s a good question.

#1: Identify the market condition which causes your strategy to lose money

Now what you need to do is to identify the market condition which is unfavourable to your trading strategy.

And it’s usually the opposite of how your trading strategy makes money.

For example:

If you’re trading a stock trend following strategy which makes money in a bull market, then a bear market or recession won’t be favourable to your trading strategy.

Simple, right?

#2: Develop a filter to avoid trading in unfavourable market condition

So now the question is:

“How can you avoid trading in a bear market?”

Well, you can use a filter.

For example:

If the S&P 500 is trading below the 100-week moving average, then you can conclude it’s a bear market and stop trading the strategy.

Conclusion

So here’s what you’ve learned:

  • If you want to succeed in trading, you must think independently and not take anything at face value
  • You must be willing to get your hands dirty because no one will do the work for you (at least not for free)
  • Trading is a get-rich-slow scheme, so manage your expectations
  • Manage your risk such that a loss is only an “ant bite” to your account
  • Your trading strategy must have an edge in the markets (or nothing else matters)
  • Be willing to execute consistently even in the face of a drawdown
  • You’re always a student of the markets because the learning never ends (even if you are a profitable trader)
  • Be emotionally in control and not get swayed by your profits and losses
  • Know when to stay out of the markets especially when market conditions aren’t favourable to your strategy

Now here’s what I’d like to know…

What’s the #1 thing professional traders do that losers don’t?

Leave a comment below and share your thoughts with me.

  • Think independently, Get your hands dirty, Have the right expectations, Manage your risk, Trade with an edge, Execute religiously. Always be a student of the markets. Emotionally in control. Know when to stay out.

  • Great piece of information: huge educative value. If I knew it I wouldn´t have lost half of my capital! Thnks for sharing!

  • I think the no 1 thing professional trader do is to look for a perfect trade they don’t look for profits I mean they do but that’s not the actual purpose, if you trade to get profit and you strategy changes with profit percentage I don’t know you’ll be successful. Profits are by product of a successful trade

  • Professional traders believe in themselves, trust in the process, and exhibit the necessary patience needed to allow their plan to develop.

    Thanks again for another fantastic write-up!

  • Professional trader thinks independently, with controll and knows that no one can be rich over nite,
    Thanks too much, for your 200% true and eye opener guidance to new traders, thanks dear reyner, lot of thanks for your every words are true………. Jitendrasinh Rana. Bhavnagar, Gujarat state of India.

  • thanks for the nice article , “If you’re trading a stock trend following strategy which makes money in a bull market, then a bear market or recession won’t be favorable to your trading strategy.”
    trend following works in bull and bear markets , it doesn’t work in ranging markets as you mentioned before .

  • It’s a useful book and I hope that is the optimum mind set that a trader should keep in his mind while trading..thanks for the guidance

  • Hey Rayner thanks for sharing a lot of knowledge about trading ,I know ‘thanks’ is a small word but it includes a lot,so keep hustling us….

  • Thanks, that really cleared up most of my misconceptions about trading. I enjoyed the article. Straightforward, well written, and informative.

  • ‘If you’re in control of your emotions, your actions will be consistent—which leads to consistent trading results.’

  • thanks for always sharing your knowledge in trading, looking forward to have a copy of your books which i really needed once i stop working and focus in trading, i still have a problem with my paypal account so pls bear with my payment transaction last time. thanks and God bless you always!

  • They treat the market with respect. They try their best to learn and understand what and how things work. They find a way to profit from it over the long term.

  • Dear Master, my comment is The professional traders’ strategies always have an edge but losers do not have an strategies. Also psychology of People till to making money hand over fist.

  • Keep learning and be more extra thinker than yourself and more ever never chase the parabolic stock. Before buying a stock. Study the market structure first.
    Importantly study and follow rules of Price Action Trading Secrets.

  • Hey Rayner sorry to derail the article. But I was reading your Sep. 16, 2020 moving average article and had a question.

    Does the 20-50ma strategy work on 15 minute timeframe. Where it tests the dynamic SR 20/50 once, twice then a third time for entry?

  • Hey Rayner,
    I had purchased “price action trading secret” book since last year up till now I didn’t get the hard copy what is solution to this ?.

    Thanks.
    Kolawole Muideen Olayemi.

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