Retail Traders have trouble staying afloat. The question is: why? Retail Trader: what does it mean? Understanding the Negative Connotation There has always been a certain divide between those that work on Wall Street insiders and those that work on Main Street outsiders.

So why do Retail Traders continue to struggle, and attract such negative vibes? Looking at the market through a microscope will lead to inevitable loss. Ignoring the fact that professional traders have a salary regardless of their performance up to a certain point.

Stated otherwise: they do not need to generate income from their trading. The psychological issues they face are somewhat easier to overcome relative to someone who is risking his own capital. The common retail trader is more like the hedge fund owner during the startup phase where his own money is at stake. Depleting Capital: professional traders seek to grow the amount under management. They can increase their risk exposure when they have a winning streak and they reduce their exposure when they lose.

This is a fundamental necessity for capital preservation. Compare that to the retail trader that wants to pull money out of his account every month as a normal paycheck.

The fact that the retail trader typically looks at short time frames, pulls money out of the account when winning but adds capital or becomes risk-seeking when losing because he needs to pay the bills so he keeps on trading and has larger spreads than professionals is usually a recipe for capital destruction!

How to be a savy Retail Trader Know this: you can be as good or even better than some professionals. Seek to survive initially, and learn. Trade on a demo while learning. Nowadays demos replicate real market conditions. Seek guidance from experienced traders. Why charge you for these when they just steal your money.

So this is where we compare it again to Las Vegas. In Las Vegas there are , slot machines, right? On the other hand, you have poker tables. And this is why they keep the entry-level low because they even let you fund an account with your credit card.

There are a few brokers that let you trade against other traders, but most brokers out there are taking the other side of your trade.

They are providing you the quote. This is why they give you free quotes and free tools. Remember, there is no foreign exchange. Keep this in mind. What happens to the majority of people when they go to Vegas? They lose money, right? So what should you do? Let me know in the comments if you have some experience with Forex brokers, or if you have opened an account and what happened.

Did you make money or did you lose money? I hope that this is helpful and tells you a little bit behind the scenes of what is happening in the Forex market. It is the biggest market in the world, a five trillion market, compared to the U. stock market worth billion. Read next: The Wheel Option Strategy Example. Your email address will not be published. Required fields are marked. Share 0. As the forex prop firm industry has grown, so has the amount of prop firms offering funding for traders.

With forex brokers reducing leverage and the industry getting more regulated, trading your Article Contents Should I Quit Forex? Do You Plan Your Trades, Journal Your Wins and Loses, and Adjust as Needed? Are You Bouncing from One Trading Strategy to Another with Little Rhyme or Reason?

Are You Still Having Fun Trading Forex? Should I Change Forex Strategy or Quit Trading? How Effective is Your Strategy Right Now? Are You Getting Closer or Further from Your Goals? How Many Forex Traders Fail and Quit?

by Justin Paolini. Being a Retail Trader is not easy — the term has attracted quite a negative connotation over the years. The main reason for this comes from the statistics of large brokerages which consistently show a minority of clients being profitable.

Does this mean Retail Trading is a losing proposition altogether? The destiny of a trader does not lie in his name. The destiny of a trader lies in his education, resilience and common sense.

But more on that later. Being a retail trader simply means:. What is a slight disadvantage is the fact that trading your own capital is emotionally destabilizing and requires some grit to overcome. Only if you have savings, can you allocate a part of the savings to risk capital trading capital.

There has always been a certain divide between those that work on Wall Street insiders and those that work on Main Street outsiders. It goes as far back as can be remembered.

Jesse Livermore was writing about Main Street vs. This is far from the truth. And there is a load of quality education on the internet. Not taken for granted, just accepted.

And it takes a great amount of personal courage to act in the face of uncertainty. Know this: you can be as good or even better than some professionals. Do not think that most professionals have the upper hand. They do not. So how can you put yourself into a position to stand a fighting chance? The path to consistency is challenging and will require dedication and perseverance. Do you have what it takes? Justin Paolini is a Forex trader and member of the team at www. com , a provider of Forex signals from ex-bank and hedge fund traders get a free trial , or get FREE access to the Advanced Forex Course for Smart Traders.

If you like his writing you can subscribe to the newsletter for free. Is Retail Forex Trading Profitable? Retail Traders have trouble staying afloat. The question is: why? Retail Trader: what does it mean? Understanding the Negative Connotation There has always been a certain divide between those that work on Wall Street insiders and those that work on Main Street outsiders.

So why do Retail Traders continue to struggle, and attract such negative vibes? Looking at the market through a microscope will lead to inevitable loss. Ignoring the fact that professional traders have a salary regardless of their performance up to a certain point. Stated otherwise: they do not need to generate income from their trading. The psychological issues they face are somewhat easier to overcome relative to someone who is risking his own capital. The common retail trader is more like the hedge fund owner during the startup phase where his own money is at stake.

Depleting Capital: professional traders seek to grow the amount under management. They can increase their risk exposure when they have a winning streak and they reduce their exposure when they lose. This is a fundamental necessity for capital preservation. Compare that to the retail trader that wants to pull money out of his account every month as a normal paycheck. The fact that the retail trader typically looks at short time frames, pulls money out of the account when winning but adds capital or becomes risk-seeking when losing because he needs to pay the bills so he keeps on trading and has larger spreads than professionals is usually a recipe for capital destruction!

How to be a savy Retail Trader Know this: you can be as good or even better than some professionals. Seek to survive initially, and learn. Trade on a demo while learning. Nowadays demos replicate real market conditions. Seek guidance from experienced traders. There are many of them around, whether on social media, forums or websites.

Having a mentor or at least some guidance can push you quickly up the learning curve. Specialize: try to do one thing well and not be a jack of all trades. applicable to all markets with minor adjustments , the method should be based around structural qualities of markets so a good understanding of market microstructure is generally a plus. You should trade small compared to the size of your trading account. Consistency and longevity are the right traits to have.

Over to you The path to consistency is challenging and will require dedication and perseverance. About the Author Justin Paolini is a Forex trader and member of the team at www.

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This will allow for you to make a few percent per month and pay your bills. Continue Reading. So what should you do? In Summary — Should You Give Up On Forex Trading? As the forex prop firm industry has grown, so has the amount of prop firms offering funding for traders.

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