Professional Forex traders are highly skilled individuals who devote a lot of time to learning how to be successful in a global market. They also know and understand they will lose some trades. The key thing that sets professionals apart from novice traders is their preparation and understanding of the market combined with their expectation of losing a percentage of trades.
A novice can have access to the same information as a professional trader, however, the professional will know how to interpret the Forex data and identify a trend that might help them make an important trading decision. The important decision is where to set their trading limit – both the lower and upper limit.
It is important to have a lower limit set so that losses can be minimised while gains can be maximised. A novice trader will only look at the rewards and can easily be caught out by losses if they have not set a sensible limit whereas a professional trader will have carefully worked out their maximum loss and a sensible profit figure.
A novice trader will try and replicate the decisions by using multiple expert advisors or trading robots. The professional will only use an expert advisor as a part of their overall trading strategy while the novice will rely almost entirely on an automated solution. That can be a major mistake for the novice trader, especially if money being used for trading could be better used elsewhere to pay bills. The key is really to only ever use disposable income for Forex trading – especially if you rely solely on any automated trading systems.
This doesn’t mean an automated system is not useful, it simply means that it should not be expected to be relied on for every single trading decision. Every expert advisor robot will have been programmed with a complex algorithm that may even account for news from different sources (in terms of actual currency movement and historical trends). However, a past trend is no guarantee that it will happen again in the future. Instead, it is only a guideline or indication of what might occur in the future.
A professional trader is able to make more informed decisions on why the trends occur while the automated system only interprets the trend as it occurs and mirrors past trends. A novice trader who solely relies on an automated trading robot can easily be caught out unless they take an active interest in news affecting the currency pair they are trading… and learn how to adjust their stop-loss and take-profit figures accordingly.
Source by Brad Nivek
