Professional Trading Strategies โ€“ One Good Trade at a Time

15 Price Action Patterns Insiders are Using If a hedge fund managers were using 15 specific price action patterns would you want to know?

Professional Trading StrategiesThe complete guide to professional trading strategies will reveal how to trade against the crowd and become a professional trader. The most efficient professional trading techniques used by hedge fund traders, bank traders, and prop traders will be outlined through this guide. By taking a look at how the biggest hedge funds make trading decisions, you can apply these same principles to your own portfolio.

If this is your first time on our website, our team at Trading Strategy Guides welcomes you. Make sure you hit the subscribe button, so you get your Free Trading Strategy every week directly into your email box.

Trading is more than just slapping on a few keyboards or using your favorite support and resistance indicator. Professional traders do more than just that as they well-know this business requires time, effort, and the right professional trading tools to succeed.

There are no shortcuts if you want to trade like a professional trader.

The good news is that these professional trading techniques can be learned by anyone willing to put in the time. You donโ€™t need to have a special talent to become a professional trader, but you need to have the right mindset and an actually proven edge.

Becoming a Professional Trader

How To Trade Like A Professional Trader

Professional traders arenโ€™t born, they are made!

Legendary trader Richard Dennis, who turned $1,600 into a $200 million fortune has successfully taught a group of traders known as The Turtles. With the Turtle experiment, Richard Dennis proved that anyone can learn how to be a professional trader.

Most hedge fund managers, bank traders, and institutional traders learned to trade profitably from another successful trader. There are a few exceptions that are self-taught professional traders, but these only confirm the rule.

Learning to trade like a professional trader doesnโ€™t mean working for a financial institution or trading large amounts of money. A professional trader is someone who over a period of time, has proven he or she can beat the market on a consistent basis.

Secondly, you need the winning mindset of a professional trader.

How to think and trade like a pro trader? You may want to check out this trading mindset PDF.

Here are a few characteristics of the mindset of a winning trader:

  • Pro traders are comfortable taking calculated risks.
  • Pro traders are self-disciplined traders.
  • Pro traders know how to leave their own personal opinions at the door.
  • Pro traders donโ€™t take losing trades personally.

We can definitely add more things into the above list, but most often these are the things amateur traders canโ€™t overcome.

While we have your attention, you should check out our free stock trading class by clicking on the banner below and learn to trade like a pro today.

Https://Www.dreamtrades.com/P/Dream-Trades-Seven-Day-Challenge/?Src=Tsg

Letโ€™s see some of the most popular professional trading techniques in action.

How To Trade Like a Professional Trader?

Professional Trader

According to Brett Steenbarger, Ph.D. author of The Psychology of Trading and a performance coach every elite trader can be characterized through 6 qualities. You can learn how professional traders trade by emulating these traits:

  • Ability to sustain focus (pro traders are either fast thinkers or deep thinkers).
  • Originality and creativity (while pro traders may use some well-known trading strategies, there is a uniqueness to how they execute that strategy).
  • All pro traders have learned from a mentor or other professional traders.
  • Emotional resilience (treating losses as a learning opportunity).
  • Attention to the details.
  • Always working to become better at this game.

Professional traders are able to recognize what are their trading strengths and weakness are and then capitalize on those strengths. This is a concept known as โ€œexploiting your edge.โ€ In other words, a pro trader is doing more of what works and less of what doesnโ€™t work.

For this, weโ€™re going to assume that pro trader A from hedge fund ABC has identified that most of his profits come from scalping the stock opening bell. On the other hand, he also noticed that he is doing a terrible job trading breakouts.

Now, a professional trader will maximize his strengths by trading bigger sizes on the opening bell. And, at the same time, he will avoid trading breakouts.

Other professional trading techniques used by many pro traders are to take one good trade at a time.

While all the tools that the professional trader uses are equally important if we were to pick just one rule, this would be:

One good trade at a time followed by another one good trade.

In his book โ€œOne Good Trade โ€“ Inside the Highly Competitive World of Proprietary Trading,โ€ Mike Bellafiore explains the characteristics of a good trade.

According to the book, one good trade is a trade that strictly follows your setups and your plan.

If you followed your plan, whether the trade yields you a profit or a loss, then thatโ€™s one good trade.

In other words, the inner workings of a good trade follow the trading rules you have set in place.

Of course, if you donโ€™t have an edge, you can follow your trading rule as much as you want; they will produce the same type of results.

So, the first thing you need is a profitable trade setup that has been proven to work. If you are new to trading, you might want to consider beginning by trading on paper using platforms such as MetaTrader4.

Tools That Professional Traders Use

Professional Trading Tools

The reality is that professional traders donโ€™t gain their edge from special tools or special technical indicators. Most of the professional traders use the same trading tools that are available to retail traders as well.

So, if there are no professional trading indicators how come a professional trader can make money using the same trading tools as you do, but you still canโ€™t seem to find any type of success?

Well, it all comes down to how you use professional trading tools.

A professional trader can take the Relative Strength Index (RSI) indicator and use it in a very unique way. This type of unconventional thinking is another trait of a professional trader.

Check out some professional trading techniques that have an unorthodox approach:

Professional Trading Strategies

Note* Some of the professional trading strategies outlined through this section can be found in the book โ€œStreet Smartโ€ by Linda Bradford Raschke and Laurence Connors.

Moving forward, weโ€™re going to share 3 professional trading strategies that work and give you some hints to pick the one that fits you.

Here is the list of what weโ€™re going to write:

  • 80-20 strategy for day trading like a pro,
  • The Holy Grail trading strategy (suitable for any market and TF).
  • Three Little Indians trading strategy (catching trend reversals like a pro).

Letโ€™s beginโ€ฆ

The 80 โ€“ 20 Trading Strategy

The basic idea behind this pro trading strategy is around a simple chart price formation. Particularly, a candlestick bar with a long body and small wicks. Usually, these types of candlestick patterns signal a market reversal. However, there are some price characteristics that need to confirm the reversal signal.

Here are the pro rules:

  • The body of the candle must take at least 80% of the total candlestick size.
  • The wicks of the candle must constitute less than 20% (ideally 10% on each side).
  • Today candle must open 5-15 ticks below (above) the momentum candle (this is meant as a guideline).
  • Once the market breaks above the momentum candle low you buy.
  • Stop-loss can be placed below todayโ€™s candle low.
  • Take quick profits as this is a scalping strategy (donโ€™t expect large profits from this chart pattern).

Note* This strategy works best in the futures market, but if youโ€™re a smart trader you can work out some variation of it to make it work on your favorite market be it stocks, forex, or cryptocurrencies.

Here is an example of a sell signal:

Professional Trading Strategies

Next, weโ€™re going to share with you an indicator-based strategy. This will prove to you that you can trade successfully even with indicators not just price action.

See below:

The Holy Grail Trading Strategy

Now, the name of this trading strategy may be controversial, but itโ€™s a simple strategy that everyone can use. The professional trading tools you need to use are:

The Holy Grail trading rules are simple to follow

See the rules for buy signals:

  • ADX must break above 30 and rising.
  • Wait for price to retest the 20-period moving average (this will be accompanied by a declining ADX, which must hold above the 30 level).
  • After the price touches the 20-period moving average place a buy order above the high of the candle.
  • After your order is filled, place a protective stop-loss order below the newly formed swing low.
  • Trail your SL to look in profits or take profits at the most recent swing high.

Here is an example that will highlight how this strategy works in practice.

See the chart below:

Professional Trading Techniques

Furthermore, weโ€™re going to outline one of the most profitable trend reversal patterns.

See below:

Three Little Indians Trading Strategy

Again, this strategy doesnโ€™t require any professional trading indicators.

The Three Little Indians trading strategy is a pure price action trading strategy that has the potential to reward us instantly. The rules for this setup are pretty simple (sell signals):

  • First, you need three consecutive symmetrical peaks (swing highs).
  • The time that passes between the development of each swing high is more or less the same.
  • Enter a short position once the market turns below the 20% range of the second peak.
  • Place your protective stop loss above the newly formed swing high.

Basically, weโ€™re trying to anticipate when the third swing high will get formed. If we wait too long, our profit margins will shrink. Read more about swing trading in forex here.

Note* this chart pattern works on the daily chart as much as it works on the lower time frame. We like to trade the Three Little Indians trading strategy on the 5-minute chart.ย 

Now, here is a real trade example.

See below:

Professional Trading Indicators

Final Words โ€“ Professional Trading Techniques

In summary, becoming a professional trader involves the same probabilities as with any other performance activity. While you can employ some of the best professional trading techniques, without the proper mindset youโ€™re still doomed to fail.

The two most important things you need to keep in mind are to learn to identify your strength and maximize those trades and secondly take one good trade at a time.

Here is a short recap of the 3 professional trading strategies outlined throughout this guide:

  • 80-20 trading strategy based on a single candlestick formation.
  • The Holy Grail trading strategy is the right way to use indicators.
  • The Three Little Indians is teaching you how professional traders spot trend reversals.

Some of the best traders in the world are successful because they have learned to trade only one strategy. Remember that many are called, but few are chosen. If you enjoyed this article, be sure to read our Professional Forex Trading Guide.

Thank you for reading!

Feel free to leave any comments below, we do read them all and will respond.

Also, please give this strategy a 5 star if you enjoyed it!

[ratings]

How useful was this post?

Click on a star to rate it!

Average rating 2.5 / 5. Vote count: 4

No votes so far! Be the first to rate this post.

As you found this post useful...

Follow us on social media!

We are sorry that this post was not useful for you!

Let us improve this post!

Tell us how we can improve this post?

15 Price Action Patterns Insiders are Using If a hedge fund managers were using 15 specific price action patterns would you want to know?

2 Comments

Leave a Reply

Your email address will not be published. Required fields are marked *

  1. Hey this is somewhat of off topic but I was wanting to know if blogs use WYSIWYG editors or if you have to manually code with HTML. Iโ€™m starting a blog soon but have no coding knowledge so I wanted to get guidance from someone with experience. Any help would be enormously appreciated!|

  2. I was suggested this website by my cousin. I am now not sure whether or not this post is written by him as no one else know such unique about my difficulty. You are wonderful! Thanks!

Disclaimer: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. No information or opinion contained on this site should be taken as a solicitation or offer to buy or sell any currency, equity or other financial instruments or services. Past performance is no indication or guarantee of future performance.