Written by admin on January 13th, 2008
Are You A Professional?
Most of us would like to think of ourselves as professionals. But the fact of the matter is most traders don’t know what it takes to warrant the moniker “professional day traderâ€.
The question is easy to answer if you work for a bank or an investment firm. For the rest of us, however, the term “professional†can be a little confusing.
Wikipedia defines a professional as:
- A worker required to possess a large body of knowledge derived from extensive academic study.
- Professions are at least to a degree self-regulating, in that they control the training and evaluation processes that admit new persons to the field.
- Professionals usually have autonomy in the workplace — they are expected to utilize their independent judgment and professional ethics in carrying out their responsibilities… Typically a professional provides a service (in exchange for payment or salary).
- Distinction [from a trade] would be that a professional does mainly mental or administrative work, as opposed to engaging in physical work.
Let’s look at each of these points from the aspect of day trading.
Body of Knowledge:
Day trading is one of the few lucrative businesses that does not require formal training. Deposit some money and you, too, can be a day trader. Does this make you a professional? Far from it. Just because you do not need a formal education to start does not mean it is unnecessary. Ironically, even if you have a formal education in trading, you may still not be a “professional” day trader. In either case, you may become a professional day trader, but no guarantees.
By talking to any real “professional†day trader, you will quickly notice that they have a huge knowledge base regarding their particular strategies, expectancy, market, and software. This is based on a combination of academic study and experience. They have gone about this by studying their strategies, testing a hypothesis, then testing again, and then testing some more. Whether this is through backtesting software, manual testing, paper trading, or walk forward testing, the fact is they test. This testing could be through scientific study, constantly mulling it over, or even simply developing a subconscious knack for their skill. Professional day traders also devour any and all information they can get their hands on. A professional day trader may not have an academic education in the formal sense. But, a professional day trader will definitely have an extensive and extraordinary knowledge of their domain.
In order to keep this post relatively manageable I will continue discussing the other three criteria that make up a “professional day trader†in a future follow up post.
Tags: day trader, Professional, testing, trading knowledge
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