[wsam29]

a "professional" trader to be?

[Knyyt]

Anyone who holds a professional license designation, IE.. series 7, etc,etc.

Also, IMHO, anyone who derives their income for support from their successful trades ( A person who trades from home, but doesnt hold a license)

Regards, Knyyt

You'll see the phrase "professional money manager" a lot referring to commodity trading advisors (CTAs). That's a designation you get from the NFA, here's a description; National Futures Association | Registration.

[Kiwi]

" Professional \Pro*fes"sion*al\, n.

A person who prosecutes anything professionally, or for a livelihood, and not in the character of an amateur; a professional worker."


A professional trader is:

- making money consistently (ie doing the job well)
- knowledgeable and competent
- not likely to be left behind by the vagaries and variations in the markets.

[brownsfan019]

Originally Posted by Knyyt »

Anyone who holds a professional license designation, IE.. series 7, etc,etc.

Knyyt - being a professional trader has no correlation with a Series 7, 3, etc. I had my 7, 63, etc when I was a stockbroker and I couldn't trade if my life depended on it. I sold investments.

Getting a Series 7 or 3 is simply passing an exam(s). By passing this exam(s) there is no probability of success. While I was a broker I was also a trainer and mentor at my firm and there is no direct correlation between passing a test and being a good broker and/or trader.

[dalby]

I kind of agree. I make the analogy between a car salesman and a race car driver.

A licensed person doesn't necessarily know the first thing about trading, and he may not even trade himself. It's a necessary credential to be a salesman.

Just cause you sell stocks (or futes etc.) doesn't make you a trader, let alone a professional trader.

The distinction between who is and isn't a "professional" trader is largely semantical of course.

One could argue that even a trader who trades very small size and has a full time job, but is methodical in his execution and has a solid, written out business plan , is being a professional trader.

Certainly I think one who makes a living trading is a professional, regardless of cert's or lack thereof.

[brownsfan019]

I would say that a professional trader:

• Derives their income and livelihood from trading
• Treats trading as a business, not a hobby

Obviously those bullet points imply that you are trading money (yours and/or OPM) in such a way that you can live comfortably off the trading gains and that your business is structured in a way that makes the most legal and tax sense.

In the end, I think it's simply running your trading business as an actual business. And by that I mean you consult the proper attorneys, cpa's, etc on how to structure your business. The reason I say that is most 'non-pro' traders are never even going to get to this step due to losses and/or lack of desire.

To me, it's very easy to tell the difference between a pro vs. a non-pro. All you have to do is ask the right questions.

[dalby]

yes

when i am teaching traders, i emphasize the business plan and risk management aspects first and foremost.

most traders (retail/non-professionals) do not TREAT their trading like a business, and are thus not professional.

Every trade decision is a business decision. People who trade impulsively or without stops, are not being professionals. They are being gamblers, imo. (as a semantical distinction).

Trading is SO simple to do - fund an account with a few thousand, and then press buttons. But that is not how a professional approaches it.

Most businesses require much greater capital investment to start, and much more extensive hoops to jump through. I think this (as much as i hate govt. regulation btw) does give most business owners at least the proper mindset to some extent before they enter.

Another thing is that professionals keep RECORDS. They go over their past activity to see how they can improve, what they did wrong etc.

Non-professionals do not analyze their past trades in detail and usually do not keep extensive data on their activities.