Do you know what one of the top advantages elite traders have over most retail traders? Now, if you guessed technology, access to research and capital, those are solid choices. However, one of the key factors that separates the elite trader from the struggling retail trader is that the pro doesn’t trade alone– they trade in teams. They are constantly communicating with other traders, seeking opinions and working together on what the next trade might be. It’s true the professional trader may have certain advantages over us. But we can follow in their footsteps if we decide to join a trading community. If you’re uncertain how becoming part of trading community can help you, check out the reasons below:
The trading community has more eyes on the market
If you’re part a community that has hundreds of eyes on the market, there is a good chance that someone will catch something that you might of missed. For example, imagine that a stock spiked on your alert ticker and you were getting ready to short it. However, someone in your chat room posts that the company has agreed to a merger (justifying the surge in the stock price). Having multiple sets of eyes on the market is a major advantage over the individual who trades alone. It can save you time and blend your strengths with someone else’s to create a strong foundation.
You could build a foundation with a trading community
If you’re new to the markets what do you do? How do you develop a trading plan and a watch list?
When you join a trading community you instantly introduced on the habits of successful traders. For example, every trade starts with a game plan. You need to have a reason why you like the trade, an entry price, and two exit points, one if you are right and one if you are wrong.
Every morning starts by reviewing a watchlist of potential stocks that you might trade that day.
Many great traders have learned through trial and error. That is a long and often costly process. The quickest way to cut through the learning curve is by finding a mentor, someone who has been in your shoes and managed to turn it around and become a successful trader.
Imagine if you had little experience in how to find the right setup or generate trading ideas. Not to mention, how to place your orders, where to look for an entry or an exit. Figuring out how to do these things early can help you save a lot of money from mistakes.
Having a million-dollar trader by your side sharing the do’s and don’ts of trading is a valuable resource. In addition, you could bounce ideas off of and ask questions to more experienced traders.
Build A Routine
Some people find it easier to get to the gym when they have a workout partner. It’s not hard to find an excuse on why you shouldn’t work out, but when you have a partner relying on you, there is a sense of responsibility developed.
Knowing that there are other like minded individuals striving for similar goals makes it easier to push on when the going gets tough.
Members of the Raging Bull community come prepared, educated, and organized.
At the end of the day, profits and losses define your success as a trader. Make more money than you lose– that’s it.
However, the inexperienced trader is often ego driven. To them, being right is just as important as making money. Instead of taking a small loss on a trade, their ego disallows them. This may be due to the fact they can’t stand being wrong so they stick in the trader longer and end up losing more money.
On the other end, when they get into the trade and it happens to work in their favor they are eager to book the profits because their ego is telling them they were right and it needs to be stroked.
Having the ability to openly discuss your methodology and decision making can help you gain objectivity.
Talking to members of your trading community about current trades helps you stay level headed even when you’re emotionally and financially invested in a trade.
In 2017, the Golden State Warriors won the NBA Championship with the motto Strength In Numbers. That expression can sum up the feeling you get when you become a member of a trading community.
Make no mistake about it, trading is not easy and most people fail when they try to figure it out on their own. However, if you join a trading community and become a member of an active trading chat room you’ll find yourself having some of those same advantages that pro traders have.
Jason Bond runs JasonBondPicks.com and is a swing trader of small-cap stocks.