This is the transcribed version of the Podcast linked above ^^^
MATT: [00:00:00] Hello I would like to talk to you about the One Minute Trader we are here to take the time strapped trader and turn them into a profitable, money making machine with daily ideas that give you, the trader on the go, a reason to trade with risk defined and profits taken when able. I’m Matt Davio and this is the One Minute Trader Podcast.
MATT: [00:00:56] All right. Welcome back to the One Minute Trader podcast and today I want to talk a little bit about amateur versus professional trading and how that looks in our views. So let’s talk about this a little bit. It’s pretty simple but yet it can be complicated how hugely successful people in any line of business. What are they doing that’s any different than those that are trying to be better answers somewhat complicated and pretty multifaceted. So one aspect though I want to talk about today is definitely it comes into play all the time is in trading and mindset in trading as many people discuss it as specifically that the real reason behind the difference between an amateur and professional as it comes to trading. So here’s here’s my thoughts on this. And I think what most people fall into the amateur status and the reason is is they have the mindset of an amateur. And so here what are the differences in how they look. There are a lot of differences and I want to point out many of them as I can in this podcast.
MATT: [00:02:20] Number one amateurs stop when they achieve anything.
MATT: [00:02:24] So let’s say you have a successful trade or you think it’s working. Stop the take the day off they take the week off that take the month off. They think they’re all set. They think they’ve figured it out. Professionals when it comes to trading understand that the initial achievement is just the beginning of the process. All right.
MATT: [00:02:42] Number two amateurs have goals. Professionals more importantly have process successful processes in place.
MATT: [00:02:51] So we talk about this all the time in training. If you don’t know why you’re going to take a trade in where the risk is in the trade why would you take it if you don’t know why you’re getting into it. While you’re going to start why you’re going to take profit. You don’t have a process. And this is so rudimentary but it’s so fundamental to being successful as a professional trader you have to have a process.
MATT: [00:03:14] Number three amateurs think they’re good at everything.
MATT: [00:03:17] Professionals understand they have certain circles of competence and this is so true in trading. If you make most of your money from the long side then you’re really good and you’re not as strong trading from the shirts that the trade from the long side. By all means look for the set ups that follow your process. Again everything comes back to the process and your circles of competence.
MATT: [00:03:39] Number four amateurs see feedback and coaching as someone criticising them as a person.
MATT: [00:03:47] Again professionals know they have weak spots. I do as a trader I do as a person. Seek out the spot for criticism as a trader to improve yourself and become a professional.
MATT: [00:04:00] Number six amateur’s value isolated performance.
MATT: [00:04:03] So they look at the last six months and say I’m up to 15 percent and they look at that and then they go another way to look at this is about a football wide receiver who catches the ball once on a difficult throw and then drops the pass that is hit some right in the numbers every time. So can you catch the ball that’s thrown most of the time in your numbers every time. Or do you drop it. And can you catch that difficult pass. Nine out of 10 times the answer is probably not. So don’t give yourself unwarranted professionalism just because you made one decent stab and one good trade. All right. Next one and we’re on to.
MATT: [00:04:49] Number six Amateur’s give up at the first sign of trouble.
MATT: [00:04:52] So this happens all the time and you go through a drawdown and even if your process is in place and you’re going through a drawdown which will happen they assume and many people assume and call themselves failures professionals see that as part of the natural ebb and flow. And as part of the growth in the mastery of becoming a professional trader. So these are key differences.
MATT: [00:05:18] Number seven amateurs don’t have any idea what improves the odds of achieving better outcomes as a trader.
MATT: [00:05:28] Professionals do again, benchmarking, establishing what you look at every day and how you look at it. And having this process are going to be key to your longstanding success as a professional. All right. Here we go.
MATT: [00:05:41] Number eight amateur who showed up to practice and have fun. I talked about this all the time.
MATT: [00:05:47] If you’re trading just for the money you don’t like the game. It’s going to become very difficult. So you really have to love the game theory part of it and realizing that doing the work before the trade happens is really the most important part of where you’re going to have success in this business.
MATT: [00:06:04] Number nine amateurs focus on identifying their weaknesses and improving improving them.
MATT: [00:06:10] Sounds ok. However professionals focus on their strengths in finding people who are strong where they are weak to help them. So again if I am not that smart when it comes to grains I want to find somebody who can help to understand what’s going on in the grain marketplace before I want to behave in the those. So that’s where mentorships and and working with professionals that can help you is really what true professionals do versus amateurs just identified “Oh I’m week here” and to try and improve on their own. All right.
MATT: [00:06:43] Number 10 amateur’s think knowledge is power.
MATT: [00:06:47] And professionals pass on their wisdom as advice. Hopefully that you can use to not have to go through the same steps that many professionals had to get to be able to tell you this so if this is a huge huge difference and again this is part of the reason why we do the one minute trader in the five bit of trade we want to share what we know to be true is about business as profession.
MATT: [00:07:12] Number 11 this is so key when it comes to amateurs versus professionals in the trading world. Amateurs focus on being right and I would say that even when I was a trader early on I was really focused on “hey I’m right”. I can tell you that you know in 1999 that we were in a tech bubble but you’re a true professional when you get the best outcome. So being right and getting the best outcome can be two completely different things. And I’ve actually went through that myself where you know even in my hedge fund I was right about 0 8 and 9 again almost nine years later. But I had difficulty convincing investors to keep their money for those difficult years until we got to that point where the big payoff came even though they were making money. So that’s the sign of a true professional and is focusing on getting your best outcomes versus being right. I always say I’d rather make money than be right when it comes to the marketplace. So keep that in mind also. That’s the sign of a true professional. Can you let go of your ego and not care about being wrong. Right. And still make money. That’s two very difficult and different things. So think about that. next.
MATT: [00:08:28] Amateur’s focus on first level thinking professionals focus on Second Level, third level, fourth level, derivatives. Again the steps ahead. The professionals thinking what if what are the contingencies if this market goes higher if this market goes lower. How will I behave under those situations. That is much different than the way the amateurs thinks, think professionally here. Next.
MATT: [00:08:51] Amateurs think good outcomes are the result of their brilliance.
MATT: [00:08:55] Professionals understand one sometimes luck plays a bigger factor. This is so true in the trading world. I can’t tell you why the market’s going to go up and down most of the time. However I can recognize when I just got lucky. And if that happens to be the case. I sometimes will just exit the position even even though it wasn’t what I thought it would happen that I may have been lucky and made some money. I will recognize it I’ll acknowledge it and move on. It has nothing to do with me. And that’s this is such a head so there’s such a fine line in this business between having ego to take risk but then understanding that you really have no control over the outcomes. So risk is risk control is really all you can control and that’s a big difference for professionals versus amateurs. Next.
MATT: [00:09:46] Amateurs obviously focus on short term. This is why so many people daytrade because they think oh if I can just make a thousand dollars a day where they’re not really looking at the big picture and focusing on how can I be successful over a week over a month over a quarter over a year. So just having a couple of daytraders is really a fool’s game when amateurs and people start talking that way I can tell you that they are generally amateurs very few professional scalpers out there. It’s a very difficult line from short term success to long term day trading success so focus on the long term not on what happens each day. Each trade. Focus on the long term. Am i developing a process that can be successful.
MATT: [00:10:34] Amateurs focus on tearing other people down.
MATT: [00:10:37] Professionals, We hope to make everybody better again. I was talking about this with Victor Neiderhoffer the other day he was talking about you know beating some of the best players in the world in squash, which was unbelievable. and when he got beat he would actually you know were when he would beat the guy below him. That guy would often root against him. I’m more of the opposite mindset. I want to root for the guy who beats me. I want him to be the champion that way I can feel like I’ve bettered myself by playing the person who was the best. So as Victor said you can take the hero heroic approach or you can take the pessimistic approach and root against your competitors so that’s a key-key thing. OK.
MATT: [00:11:22] Amateurs like to look for decisions made by groups or by some software so they can blame if things go wrong.
MATT: [00:11:32] And this happens all the time to try to get me back task and then I think I have the Holy Grail and then when it goes wrong I blame it on the Holy Grail again professionals just say I made a mistake whether it was a bad test or a different trade idea except the responsibility to fix it if it needs fixing. Discard it if it’s not working and just accept the responsibility of the risk and move on. This is key to being a professional. So amateur’s again they tend to blame others and other outside factors professionals who say took a bad trade happens all the time. If you can’t accept that the imperfect ness of this business is real you will fail dramatically.
MATT: [00:12:17] Amateur show up inconsistently professionals show up every day.
MATT: [00:12:20] I say this, again, in training and in any business have to have a schedule have to know when you want to behave how you’re going to behave and do it, consistently over and over again show up at the same time. Have a routine without it you’re not a true professional. I mean why do you think baseball players show up eight hours before they play the game. Because they have routines and practices to get ready for the game. So there are a lot of other differences but I think all these amateurs vs. professionals for traders that I broke out for you comes down to two things fear or you win by fear that you’re an amateur or are you run by reality which is I accept responsibility for failure and for success. That’s the simple black and white line for me. Are you run by fear or can you handle the reality of the situation. Amateurs believe that the world should work the way they want it to. Professionals realize that when it comes to trading they have no control except for factoring. How can they define risk. Amateurs therefore are scared scared to be vulnerable and honest with themselves. Professionals feel like they are capable of handling anything and they take it with a little grain of salt. Luck aside which approach do you think is going to have the best long term results. So. If you find yourself behaving like an amateur yet you’re professional. Notice it. Be aware. Move back to the professional side. what’s holding you back. Let us help you here. The five minute trader We’d love to help you sign up for the daily videos. If you’re not already and if you’d like one on one consulting. Drop me an email ( [email protected] ) love to help you work through this process. It’s very very prevalent. And again first step is acknowledgment. All right. Take care have a great day. We’ll talk to you on the other side.
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