What Separates the Retail Forex Trader from the Professional?

Focus: FOREX

Steve Nauta of Daticks highlights the five reasons for why he believes that retail forex traders aren’t as successful as professional traders and what can be done about this.

For years, I’ve heard that 90% of traders lose money trading and they lose it to the 10% who are making money. More recently, it seems that the numbers I hear are 95-5, so even worse.

FXCM recently released a report showing, according to them, retail forex traders received better executions than institutional or exchange traders. In my experience working for two FX brokers, they are exactly right. Retail traders get ridiculously great pricing and fills.

How is it that retail traders are getting better pricing, but they still lose on a higher percentage of trades than institutional and professional traders? I think there are five reasons why retail traders aren’t as successful as professional traders.

1. Execution of Trading Strategy

Through many years of working on a trading desk and talking to customers and banks, I didn’t see much of a difference in the actual trading strategies between our trading desk, the trading desk at a bank, our institutional/professional traders, or our retail trader. Everyone has the same access to charting, technical analysis and pricing analysis.

Professional traders do not simply limit themselves to technical analysis. They know their own trading very well: their tendencies, how much they are comfortable risking, how to minimize their bad trades while maximizing their good trades.