Top Five Retail Trader Traits to Change

I’m a Retail Trader, by definition. I don’t lease a seat at the exchange, nor do I trade others’ money for a fee. Brokers treat me as a normal retail trader, so I get the same access and rates as everyone else that trades remotely. 
 
But after twenty years of this life, I consider myself a professional. Trading is what I do for a living and is how I’ve created my own net worth. I have an edge in the markets that has taken me a lot of work and pain to forge. 
 
I only bring this up because to others in the business, there’s no difference between me and someone who has just started trading the markets this year. But in my eyes, we are worlds apart and I can spot it in anyone in a microsecond. Here are five common traits that I see in beginning retail traders: 
 
#1 Entering Positions Without a Clear Exit
 
This is number one with a bullet. I think this starts because most retail traders won’t enter a position unless they are wildly optimistic that it will work out, for whatever reason. Usually it’s because of a suggestion from others. The mind races, thinking about how great it will feel to win that trade and enjoy the spoils of victory. And this is why it’s so jarring to see the price turn around and work against your trade; you’re like a deer in the headlights and you don’t know what to do. One of the most important things that you can do TODAY is to interrupt this pattern and define your exit BEFORE you place your next trade. 
 
#2 Entering Positions With Too Much Risk 
 
Usually tied in closely with #1 simply because a retail trader that feels “good” about a trade will double down on it, without any reason other than wanting to feel EVEN BETTER after that “sure win” to come. You will never properly manage a position until you find
a way to NOT CARE about it. This is why many traders are aces when it comes to trading their sim accounts, only to fall to pieces when real capital comes into play. Trade very, very small positions until your performance earns you the right to trade larger ones. 
 
#3 Following the Herd
 
If you are following the same advisors or news sources or trades as everyone else, then expect to produce mediocre results like everyone else. Humans are social animals and we don’t like to operate without the safety and the acceptance of the community. This can be a very difficult one to solve if you have trouble thinking independently. The easiest thing that you can do to help correct this is to turn off the standard news sources and start to think for yourself. It’s a big step, but you’ll have to take it eventually if you want to be profitable. 
 
#4 Jack of All Trades and Master of None
 
Something that we’re taught from early childhood is to diversify, and “not put all of your eggs in one basket.” We nod at this sage advice and scatter our attention to be paper-thin on too many things. If you need your soles replaced on your $500 boots, are you going to go to WalMart? Or will you seek out that little independent hole-in-the-wall shoe repair place on a back alley? If you want to earn your fair share versus the best in the world, then you’ll need to become an expert at one thing to begin with BEFORE you expand your focus to different methods of trading. Spend the time now to determine what method of trading that gives you the “rage to master.” 
 
#5  Stop Trying to Predict the Future
 
Once we learn a couple of fancy indicators, we think that we can predict the future with ease. I certainly fell into this trap early on. You must come to grips with the fact that ANYTHING CAN AND OFTEN WILL HAPPEN in the future, and you will never be able to accurately predict that. Sure, some things repeat and certain types of markets can be more linear and repetitive than others, but don’t let that give you the hubris to believe that you are Nostradamus. Professionals don’t try to predict the future; they work on programming THEIR FUTURE ACTION depending on what the price does. 
 
See if you recognize any of these typical retail trader liabilities before you spend another dollar funding someone else’s account. 
 
In your corner……..Doc Severson