Advantages of Individual Forex Traders Analysis

2023-08-09
Summary:

Individual traders can participate more flexibly in the market without being restricted by internal decision-making within the institution. They can trade based on their own judgment and analysis and have more freedom to choose trading times and strategies.

Most forex traders do not work in large investment banks, and the vast majority of forex traders use their free time to occasionally try a few trades. In contrast, individual traders are "small men", while investment banks are "giants". The former lacks the latter's basic equipment, logistics personnel, research conditions, the latest information systems, analysis software, and hardware, as well as an environment for peer competition. However, small people also have some advantages that giants do not have. In order to effectively defeat giants in the market, individual traders must fully leverage their advantages.


Advantages of individual forex traders

1: No need to force transactions

Not comfortable, but with higher profit opportunities. This is the advantage of rejecting transactions. As Bill explained, personal trading clearly has an advantage in this area over professional trader in investment banks, who must cope with the supervision of upper management.


If you work as a trader in a large institution, it's probably hard to say, 'Today's market doesn't look very good; let's read the newspaper,' because the boss may have said earlier, 'What newspaper do you read if you don't trade?' In fact, if a trader can reduce the number of trades by 50%, they can usually make more money.


250 trading days a year, assuming you make one transaction every day, do you know what the final outcome will be? As a result, there are only five key transactions, and the view of three transactions is completely wrong, causing you to lose a lot, and the judgment of two transactions is completely correct, causing you to make a profit. The remaining 245 transactions are irrelevant—small gains and small losses. In many cases, it is not suitable to enter the market, but you reluctantly trade, and the result can only be expected. Unwrapping your exit and being a little careless may even lead to a poor winning position, resulting in significant losses. There are only a few real winning or losing decisions.


It is important to understand the benefits of 'off-the-market watching'. If there is no appropriate market trend and no high chance of winning, do not force yourself into the market. The key to the entire trading game is to continuously grasp the advantage. The bet must have a high chance of winning. If you always grasp this principle, you can take the lead, and of course, the destructive risk must be low enough to not be knocked out by three or two consecutive losses. Therefore, assuming that you work as a trader in a large institution, and if someone keEPS staring at you and says, 'You don't take care of trading positions?' Should you read the newspaper? The correct answer is' Exactly so '. However, the management may not listen.


2: Decision Control Procedure

If you operate your own funds, do whatever you say. All decisions are under your control. Similarly, if you are not a floor trader and engage in proxy operations, as long as the clients are all individual investors, there is still considerable room for investment.


Individual investors don't call you every day to bother you because they don't care about what position you hold—long, short, or short. In every aspect, you are the only decision-maker: what to trade, when to trade, or whether to trade. I smile because, like you, I have been at this level for some time now, and I operate my own funds—you, me, or every trader you plan to visit. If our performance is always at a certain level of 480%, 200%, 80%, or a specific level, then it is absolutely impossible to succeed.


According to Bill, if you can fully grasp trading decisions, your operational performance should be ideal, perhaps better than that of a professional trader in a bank. If individual traders cannot achieve this level of performance, once someone is watching you, it becomes difficult. When I discussed this with Cavy Alamoti, the head of derivatives and arbitrage at Donghai Bank, he also agreed with this view. I mentioned that my trading performance is not inferior to that of star traders in investment banks. Regarding this, I regret to say that these star traders have "slightly more capital" than me!


3: Information

Individual investors have more and more information, and they are no longer inferior to professional traders in this regard or even in the same position. So, strictly speaking, no one can have the advantage of information.


In terms of the speed of information transmission in 1997, no one can fully digest it. No one can first obtain information. A person sitting in the living room of a small town in Kansas watching TV won't lose their speed in obtaining information compared to the traders in the market. Ten years ago, because I was in Salomon, my advantage was clearly greater than that of the majority of people because I had information technology. My residence also had equipment from Reuters and Deloitte Information, and in New York, only a few traders could achieve this. Now, all of this is too ordinary.


I hope my home is also equipped with an information system; otherwise, like other traders, I have to inquire about the market situation through my colleagues in London. For me, this is equivalent to obtaining second-hand information. Therefore, through my Deloitte information system at home, I can work at any time and keep track of the development of the market. Nowadays, almost everyone can access this type of information, and the advantage of professional traders no longer exists.



4: Resilience and Agility

We all know that giants are difficult to adjust flexibly, which can be explained by the laws of inertia in physics. There are similar rules in the field of trading, which is an advantage that David has mastered.


As a 'sesame mung bean', you can quickly adjust your company's direction. Many small companies operate in many markets at the same time. For example, if a market suddenly presents trading opportunities or undergoes structural changes, it may be difficult for large institutions to react immediately. The larger the company, the more rubber stamps there are and the more time it takes to adjust. This is a characteristic of large institutions.


Traders must observe changes in the overall industry, just as the CEO of Coca-Cola must pay attention to changes in the entire soft drink market. So, when laws are modified or other structural changes occur, you are more likely to adjust products or change the market. Throughout the entire trading career, this advantage may only be applied once, but it is still worth remembering.


5: Pressure

The fate of individual forex traders is completely in their own hands, and relatively speaking, they usually do not yield to the pressure of others. However, this may not necessarily be an absolute advantage.


Compared to professional traders, individual forex traders have less pressure to be supervised, and no one is staring at you and saying, 'You must do this or should do that.' However, on the other hand, no one is always reminding you of the norms you should have, such as: 'You must immediately admit losses; this position is too large; that position is too small.' This may be a negative number. As an individual trader, there is no supervisor at stake. Provide suggestions for you. You may say, 'This is a great deal; I want to stick to it,' but in large institutions, there is usually an enthusiastic supervisor who tells you, 'This position is not a problem; that position is too big; your losses are already too severe; you must exit.'


Therefore, as an individual forex trader, you must experience the positive benefits of external pressure (such as mandatory regulations), so you must cultivate a spirit of self-discipline.


Disclaimer: Investment involves risk. The content of this article is not an investment advice and does not constitute any offer or solicitation to offer or recommendation of any investment product.

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