A pro stock trader, also known as a professional trader, is in the trading business for a living. Pro stock traders know how to read and analyze data from the market. They need a complete analysis of the market’s pace and speed to maximize their profits when investments are made.
In addition to this, they must understand the types of stocks that will be profitable at all times, whether it be during recession or depression, making them timeless traders. Furthermore, they should also understand how trends change over time and how their industry evolves with it; they can react accordingly and always stay ahead of the curve.
An amateur stock trader, also known as a retail trader, doesn’t invest in stocks for a living and acts independently. Amateurs are usually unlearned about trading. They erratically buy and sell shares because their emotions are involved in their decision-making process.
In addition to this, amateurs trade without any knowledge about the market or industry trends, making them unpredictable traders that can get themselves into big trouble if they don’t stop before it’s too late. Furthermore, amateurs have no strategy whatsoever and cannot maximize their profits when investments are made.
Strategies used
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Professional traders usually have an extensive background in finance or economics, while amateurs can be anyone with little to no financial knowledge. Professional traders can read the market’s mood while analyzing volumes and other metrics, which provides them with information about how stocks will perform in the future.
On the other hand, Amateurs base their trades on emotions, making them unable to predict stock performance. Due to this, it is improbable for an amateur trader who has traded based on emotions only for a few months to beat professional traders who have studied at top universities, followed by years of experience trading in the market.
Start-up costs
Because pro traders are self-employed, they need start-up capital that should be considerable enough to sustain daily operations until profits start coming in; usually after a few months or weeks. In addition to this, they should also be able to pay for taxes, office space and other expenses that aren’t included in the start-up costs.
Because amateurs are not self-employed, they don’t have to worry about any of this, which means there won’t be any substantial financial strain on them after investing in stocks.
Trading accounts
Since pro traders must also have an account that will include all their daily activities, everything is organized accordingly. Since amateur traders are usually just playing around with trading, they don’t need advanced tools or anything too complicated because this would only lead them to confusion at a point when clarity is needed most.
Furthermore, if the broker offers apps, then amateurs should avoid them at all costs, or they might be tempted to trade while on the go.
Trading platforms
Professional traders use advanced trading platforms that include graphs, technical indicators and other visual data that helps them make quick decisions based on accurate calculations. We cannot say the same for amateurs because they will lack knowledge of using these tools, which leads to confusion when buying and selling stocks.
Furthermore, if the broker offers apps, then amateurs should not download them under any circumstance unless they want to risk losing their hard-earned money due to distractions while on the go.
Time commitment
Because professional traders are self-employed, their work hours are completely flexible; therefore, they can always find time to trade when the market is open. If they invest in stocks in Dubai, there are 19 hours to make trades for five days in a row. On the other hand, Amateurs have set schedules that don’t allow them to trade while markets are open.
Losses/profits
Since amateurs have little to no experience trading, there is a high chance that they will lose all of their investments on the first try. It might not be as bad if it was just pocket change, but amateurs tend to invest large amounts of cash, which means loss equals bankruptcy. Professional traders know how the stock market works and make intelligent decisions based on accurate assumptions about what stocks will perform well in the future.
It helps them make a profit daily which they can use to grow their wealth quickly over the years. Click to read more.
Raj Kumar is a qualified business/finance writer expert in investment, debt, credit cards, Passive income, financial updates. He advises in his blog finance clap.
