What differentiates a professional from an amateur trader?

In this new article, our Trading Psychologist Celeste describes what separates amateur and professional traders. She defines five essential differences and gives tips on how to adopt a mindset of a professional.

What differentiates a professional from an amateur trader?

Trading might have a low barrier for entry but it has one of the highest barriers to profitability.

I’ve had experience coaching both professionals and amateurs.

It’s safe to say that none of them came into trading with the goal to lose. Obviously, we want to make money, and this has made a professional and an amateur essentially the same.

The motivation remains true across all levels of traders.

The wide gap between the two, however, is just a minor shift of perspective.

Here are the top 5 differences between a professional trader and an amateur trader.

Professional traders respect the craft

Professionals understand that there are people who make a living through trading and give it the respect it entails. It may be a game of probabilities but with a systematic approach, consistency can be achieved.

Amateurs are hyperfocused with the easy money, forgetting that this is a professional field. They typically brush off as normal behaviour to spend money and time for a degree that will take years to establish but enter the market as traders expecting to make money with almost zero preparation.

Professionals treat trading as a business, not a hobby

The main difference between business and hobby is that in a business, you dissect your activity objectively and expect an ROI.

Hobbies are things we do just for fun and this is the case for amateurs who come in the stock market with greed. Professionals, on the other hand, record their transactions, research their ideas, study their results, and execute a system that is according to their trade plan.

Another aspect to consider is how deep their interest runs.

A business needs commitment, while a hobby is something someone does only when they feel like it and just for the emotional kicks it delivers.

This means showing up day in and day out even just for practice and accepting that any business takes the time it needs to grow (just like our portfolio).

Professionals are process-focused, not outcome-focused

Since this is a business, professionals use their outcome as a hint on how to improve their process.

The end goal is not the end-all-be-all factor of their trading, but an indicator of how their system is currently performing.

Professionals act like professionals every day, they show it through their actions with or without a trade. It is in their preparation, their execution, and post-trade analysis. Like a well-oiled machine, a professional trader does not stop being a trader when the market closes. Their work and their edge are in what they do when everyone else is away from the screen.

Professionals manage risk, amateurs gamble

Both professionals and amateurs lose, the difference lies in the amount and control.
Professionals have accepted how much they are willing to lose even before the trade begins and will ensure that it does not go beyond that.

Amateurs rely on luck. To them, the risk is an afterthought, a remote consequence, a factor to be avoided. Thinking they can beat the system by finding a Holy Grail of indicators, they are sent on a wild goose chase that never ends.

Professionals, on the other hand, focus on a system that works and then mitigate the inevitable losses that can occur.

Losing is not a problem. It’s letting the losses get out of hand that is.

And while the amateur is on his 10th brand new system, the professional is quietly and consistently mastering his.

Their horizons differ

Amateur traders are here for the quick money and it shows in their trades.

Every single loss hurts because they’re looking for that one trade that could put them in retirement. Their tactics are hurried and their goal is to get things done as fast as possible.

Professionals have a much longer time horizon. Understanding that this is something they are willing to develop for years puts them at a more objective state. No single trade means too much aside from the lessons it can give, and every loss is a chance to grow rather than a blow to their ego.


With the fresh batch of new traders coming in, the distinction between a professional and an amateur becomes much more apparent.

It’s important to note that new traders can act more professional compared to veteran traders who stubbornly refuse to improvise and adapt according to the new market environment.

Being a professional and being an amateur is not in the years of trading. It’s in the mindset and in their process that separates them from the rest of the crowd.