How can Retail Traders Succeed?

May 24, 2014

- By Asad Dossani, Author, The Lucrative Derivative Report

Asad Dossani
Unfortunately, most retail traders tend to lose money. In the marketplace, there are retail and professional traders, and retail and professional investors. When one is competing against a professional, we can see why retail traders tend to not to do as well. A professional trader devotes more time and resources to trading, and so they are more likely to perform better.

Given this disparity, how can retail traders succeed? We can break down the answer into two components. First, retail traders make common mistakes that should be avoided. Second, retail traders need to understand what advantages they have over professional traders and exploit that.

The most common mistake that retail traders make is that they place too much emphasis on losses, and naturally assume that if a trade made a loss, the strategy to come up with that trade must have been wrong. But this is not the case. Any good trading strategy we have is going to make losses. Even an excellent strategy that makes money 2/3 of the time is going to have many losing trades. And sometimes there will be strings of losing trades. This is normal and part of trading. It does not mean that your trading strategy is wrong.

The next part of how retail traders can succeed is to use strategies where they have an advantage over professional traders. Professional investors and traders face many constraints that retail participants do not. For example, professionals usually have to manage large sums of money. There are trading strategies that can be exploited only with a small amount of funds, and these are strategies where retail investors have an advantage.

The key to succeeding as a retail trader is to find the strategies where you have an advantage. This will also depend on one's own personal situation. For example, how much capital is allocated to trading, what are the individual trader's strengths and weaknesses, how much time can you devote to trading, etc. All of these factors are important for determining the optimal trading strategy.

Retail traders certainly can succeed with the correct approach. Getting the correct approach requires time and there is a learning curve before one can expect to be successful. The key to success is to determine what your advantage is over other market participants, and how to use that to form a profitable trading strategy.

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is a financial analyst and columnist. He actively trades his own and others' funds, investing primarily in currency, commodity, and stock index derivative products. Prior to this, he worked at Deutsche Bank as an analyst in the FX derivatives team. He is a graduate of the London School of Economics. Asad is a keen observer of macroeconomic trends and their effects on global financial markets. He is deeply passionate about educating investors, and encouraging individuals to take part in and profit from financial markets. To put it colloquially, he wishes to take Wall Street products and turn them into Main Street profits!

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6 Responses to "How can Retail Traders Succeed?"


Jul 2, 2014

Respected sir,I stepped in the stock marketing last July with initial investment of Rs 5000 only.i didn't know ABC of the market.But by searching on Internet and reading articals I gather some information and started investing Rs 4000 every month for six months. I got profit and now I have shares of about50,000and money in account is20, I have started in nifty options also .although not getting much profit but getting experience day by day. I have A large portfolio of 10-10or 20-20 shares of different companies .


r k ray

Jun 9, 2014

due to my ignorance i have lost 60% of Rupees 2 Lac which I invested during 2008-09. I am a old man with an income of Rs.4000/- from Bank fixed deposit.We are two,running a difficult time.

Like (1)


Jun 8, 2014

Mr Asad. Your article, I'm sorry to say is very generic. The mistake and advantage thing that you mention is true for anything in life. The title seemed more promising but the content could've given more particular details. Not that I'm an expert but expected something more from an expert.


Like (1)


May 27, 2014

Asad's simple and lucid style is like a breath of fresh air. His empathy for the small investor is evident in all his articles. He takes infinite pains to keep things simple which is the hallmark of a true genius.
May his tribe increase !

Like (1)

Ankit Mangla

May 25, 2014

Mr Assad,
I am follwoing all the recommendation On Lucrative derivatives authored by you. I am sorry to say that this service has been a loosing streak so far. I am sure whether it has anything to do with retail/professional. Many of the recommendations nave hit the stop loss but only one or two have hit the target price in last 6 months. I don't understand what is going wrong?


Like (2)

P Sanyal

May 25, 2014

A very useful article. This will definitely help me in improving my trading pattern. Would look forward to have more such guidelines for retail traders.

Like (2)
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