How do experienced traders compare to beginners?

The world’s financial markets have arguably never been more accessible to investors, with the forex market alone witnessing an astonishing daily trading volume in excess of $6 trillion.

Such sustained growth in trading volumes is undoubtedly being driven by the rise of part-time and inexperienced traders, as technological advancement continues to eradicate many of the barriers to entry that once surrounded the markets.

However, there’s no doubt that experienced traders continue to dominate the world’s financial market, as they continue to benefit from the steep learning curve that they’ve embarked on previously. But how exactly do experienced traders compare to beginners in the market?

Learning How to Use the Tools of the Trade

It’s fair to surmise that all financial market traders start from a solid foundation of knowledge, which investors build upon by gaining practical experience.

This is where experienced and seasoned traders have a distinct advantage, as they have fully leveraged demo accounts to gain corporeal trading knowledge and bridged the gap between theory and understanding.

Not only this, but experienced traders may have also utilised more comprehensive forex founded accounts, while also accessing technical stock brokers to gain a competitive edge in the marketplace.

By transitioning from demo to full trading accounts, experienced traders have also developed a far greater understanding of fundamental tools and the jargon used by brokerage sites. For example, they’ll have sunk hundreds of hours into analysing historic and real-time data relating to trades, building a keen sense of understanding and determinism in the process.

On a similar note, seasoned traders have also grown accustomed to investing their own capital over time, enabling them to build a far greater awareness of market risks and move quickly to mitigate these over time.

This also makes it far easier for experienced traders to diversify their assets, as they look to minimise their market exposure and long-term losses.

Learning from Mistakes and Developing a Winning Trading Strategy

From a practical and behavioural perspective, it’s also fair to surmise that experienced traders will have made more mistakes than others over time. 

With the right mindset, each of these provides a unique opportunity to learn and grow, and in this respect, seasoned traders will have developed a far greater store of practical knowledge that they can draw upon.

There’s a clear takeaway for novice traders here too; as they should look to embrace rather than fear mistakes and heed the lessons that are subsequently learned as a way of growing and making more informed decisions in the future.

We spoke earlier about determinism, which helps traders to appreciate (and leverage) the underlying laws that govern change in their chosen marketplace. 

This can also help you to shape and adapt your trading strategy in real-time, and it’s something that experienced and successful traders tend to have in abundance. Make no mistake; seasoned traders rely on their sense of determinism and innate instincts to react to market movements in real-time, as they appraise developments and identify which ones are likely to impact on their trades.

This is another critical lesson for novice traders to heed, as understanding the precise impact of geopolitical events and various macroeconomic factors can enable investors to thrive and make effective decisions as quickly as possible.