What is it that professional traders know that retail traders don’t?

This is an answer from Quora:

Firstly, thank you for your question Tshepo.

Secondly, I will answer from day-trading perspective, and what I have discovered in the past 25 years — are trading tales that are floating around in the trading community.

Mind the gap, and I hope this will shine some light on what is what…

• Day Trading is like gambling — If I hear another person say this, I may literally punch a hole in my drywall. Day trading is the furthest thing from gambling! Like anything in life, if you take on something and you are unprepared, then you will get your you know what handed to you. Day trading requires enormous practice, focus and dedication to a set of rules. If you keep your eyes on the ball, day trading can be just as predictive as you getting a paycheck every two weeks from your job.
• Day Trading is a Man’s Game — anything a man can do a woman can do better. Don’t believe me, ask your wife. Trading is not somehow geared to men because we are perceived hunters and the ultimate competitive creatures. Some of the best traders in the world are women.
• Stops aren’t Necessary — I have toyed around with the idea of trading without stops. My premise was that using stops was a glorified way of saying you were too afraid to take on the risk of your position. Wrong! You need to use stops in order to make sure you don’t lose all of your capital on one bad trade. It’s better to live to fight another day, then to be slaughtered on the battlefield.
• You can Make Money Trading All Day — this is a bit of fact and fiction; however, I will say that the vast majority of day traders make money trading in the morning. Since this article is not about playing both sides of the fence, then I have to say it’s a myth to think that you can trade all day long and consistently turn a profit.
• There is Volatility from 11–2pm — believe it or not, day traders need to eat like every other human being on the planet. If you are out there whacking at the weeds during lunch, you are literally going to drive yourself crazy as you watch stops violated and low share trades push a stock one way or another. At the end of all the back and forth, you will notice that your stock hasn’t really moved much in either direction, but you have lined your broker’s pockets with trade commissions.
• Using 4 times margin is a good idea — Margin is purely psychological for most traders and has little to do with risk management or hedging a position. Traders just see that they can use 4 times their margin, so they wildly throw their funds into the market. As a trader, you will quickly realize that the more margin you use will ultimately prove to be disastrous as you go through an expected downturn. Margin must be used wisely and maxing out your margin is never a good idea. In life, you always need to keep a trap door open, just in case you need to make a last minute getaway.
• Pre-Market Trading is lucrative — trading is meant to take place between the hours of 9:30am and 4:00pm. Trying to somehow master the pre-market trading realm to get ahead of the market is a farce. Volumes are thin and the bid/ask spreads are terrible. Focus your efforts on trading during core market hours. Playing in the pre-market arena really comes down to you thinking you know what’s best, when in reality the pre-market is often the worst case of irrational exuberance you will find in the market.
• After Hours Trading is lucrative — please see above; same rules apply for traders trying to jump in the pond before the market opens the next day.
• Day Trading Futures is Easy Money — futures trading in my opinion are actually harder than equities. Reason being, more professional traders trade futures with a hyper focus in one or two instruments (E-mini, etc.). You are better off competing against the retail traders in equities until you get your feet wet.
• You need a ton of day trading monitors — save your money. Don’t go out here buying some custom day trading setup because you need to watch 6 different time frames for the same stock. If you can’t make sense of the action with 3 monitors, you sure won’t be able to figure things out with 10.
• You can day trade from work — day trading from work is a horrible idea. Unless you are working in a server farm and things never go down, the day-to-day distractions at work will hurt your trading performance. Not to mention your employer is paying you to work, so shame on you. Let me not judge, but you get the point.
• There is Money in the first 30 minutes — there is a ton of money in day trading the first 30 minutes. Sad thing for you, it’s really tough to consistently turn a profit. You will need years and I mean years of experience trading this early in the am before you will be able to identify trends in order to make split second decisions. The market is unforgiving in the morning, so if you don’t know what you are doing, the volatility will kill you.
• Let your winners run — this is one of the most ridiculous statements I have ever heard. To newbie traders, they will interpret this to mean hold onto my stocks forever, because they are going to run to the moon. The last time I checked, the only time you make money in the market is when you close your position and put cash in your pocket. So, let your winners run to a point, but have a plan for when you need to exit your position.
• You must sell half of your position once you’re up a bit — some traders sell half; I however sell all of my position. I’ve noticed that when I would sell half of a position, I would relax my rules and get a little sloppy on the second half. Bottom-line for me, I simply make more money when the pressure is on me and I am on the ball. So, focus on trading your entire position and leave the multiple entry/exit strategies to the folks looking to over complicate the market.
• The more indicators the better — show me a trader with 10 or more indicators on his/her chart and I’ll show you a broke trader. Adding a million indicators to a chart will not correct the fact you have no idea what you are doing. Don’t handicap yourself with both confirming and contradicting points of view. Have enough courage and belief in yourself that you have what it takes to succeed at day trading.
• Day Trading Taxes are Way Too High — day trading gains are taxed at whatever income tax bracket you fall into. Stop thinking that the man is out to take 50+% of your trading profits. Remember, paying taxes is a good thing; it means you are a profitable trader.
• Day Trading Tips are Helpful — day trading tips are one of the most hurtful things you can expose yourself to in the market. If you find yourself cruising stock picking sites and social sharing sites, then stop. You will never get the fills of the folks on the board and you have no way of knowing what is going on behind the avatars. For all you know, the forum member could be saying to sell, when in reality they are hoping to get the stock at a lower price. Remember, you are dealing with traders; these are not always nice people.
• You can’t trade from a Laptop — there are tons of traders now that are traveling the world and still conducting their trading activity on the road. They simply pull out their laptop, load up a few charts and conduct their business. Sometimes less is more and the additional hardware of a fully customized trading office is no guarantee you will turn a profit.
• You can make a living with little equity — day trading costs money. Anyone that tells you that you don’t need money to make money has no idea what he or she is talking about. After commissions, living expenses and a rough streak or two, you will be hard pressed to make a living. Take my word for it, I tried this route and boy did I fall on my face.
• You should only Short Sell — the market goes up and the market goes down. Why be obsessed with one or the other. You need to be flexible in your trading styles, so you can follow the primary trend, whichever way she takes you.
• Reading Books is a waste of time — while you may not use the strategies provided in a day trading book, the thought process provided by the author could trigger creative thoughts, which can affect your bottom-line. The first time I read ‘Reminiscences of a Stock Operator’; I couldn’t fall asleep because I felt like I went back in a time machine. Funny though, the emotions expressed in the market are just as relevant in the 21st century as they were in the 20th century.
• Moving Averages are worthless — Moving averages are one of the best ways to gauge the strength of the primary trend and whether you should enter or exit a trade. You’ll be surprised how much punch is in the moving averages.
• You have to understand Elliott Wave to make money — I’m not going to bash Elliott Wave, because it’s just too easy. Nevertheless, I will caution you of trying to outsmart and predict where the market is going. I can’t tell you how many Elliott Wave analysts I have encountered over the years that have provided 5 different counts or more on the same chart. Don’t worry if you can’t exactly map a wave-3 extension in a primary wave 1…. did you get all that?
• Day Trading Penny Stocks is easy- you had better know what you are doing. By shear definition, penny stocks are volatile and if you are trying to day trade these stocks; things can get even more complicated. You are better focusing on volatile stocks and not just that the stock is cheap. Oftentimes things are cheap for a reason.
• Day Trading Options is the way to go — I get it, you want to create this or that straddle to eliminate your risk. Well let me help you out here, you can’t avoid the risk. Just trade the stocks straight up, don’t try to become some M.I.T whiz kid overnight. Leave the complicated Black Scholes grids to the experts.
• Who Needs Day Trading Rules — You do! If you go out there without rules, the market will take your money. Imagine watching a football or soccer game with no rules. All you would see is total chaos that will ultimately lead into two teams brawling on the field. Day trading is very much the same way. With no boundaries, it’s only a matter of time before you blow up your account.
• Day Trading Algorithms — please stop wasting your time writing the next wonder program that will print money from the market. They can and do work, but let the super smart think tanks with direct lines to the exchanges do their thing. I do use algorithmic trading but, don’t try to play in this pond, if you don’t have the resources, expertise or time to constantly stress test your model. Start taking accountability for your trading and stop relying on code.
• You need an Advanced Degree to Day Trade — trading is one of the last meritocracy left in the world. It doesn’t matter your race, religion, education level, or financial background. If you work hard and learn what makes you tick, skies the limit. Often times the traders with a ton of formal schooling have it the worst, because they are used to always being right and are unable to let go of the need to win every trade.
• Day Trading Business Plans are Boring — don’t want to make money, then don’t write down your business plan. How much do you plan on making per month? What will you do with your trading profits? These are questions most day traders don’t ask themselves, because they never have any intention of taking money out of the market. A good number of traders look at day trading as a hobby. They are really looking for action and could care less about making money.
• Tracking Trading Performance is Complicated — yes it is if you are looking at one of these data dump reports provided on the web. Tracking your trading performance comes down to a few key performance indicators (KPIs) that help you identify how to become a more consistent and profitable trader. One of my favourites is tracking your profit in terms of R. The bottom-line, did I make more money from my winners than my losers? Who cares if Monday is your best winning day between the hours of 10am and 11:30am? Keep trading long enough and Wednesday will become your best trading day. Do not get lost in Sharpe ratios; leave the million plus performance ratios to the statisticians and just focus on the few KPIs that make you money.
• The more expensive the more valuable the day trading course — Wrong! I do agree with the idea of buying books and taking courses, because this will spark your creative juices as you are defining your trading methodology. Nevertheless, to think just because you pay someone thousands of dollars, their course will work exponentially better than a $500 dollar course is just the wrong way to think about it. Your trading style could be in alignment more with the person selling the $500 dollar course, which would result in you making more money. Don’t fork over tons of money, especially when you start out. You will want to take the perceived easy way out if you start struggling up front and pay big money for a course, which is exactly what some of these so-called gurus want you to do.
• Day Trading Chat Rooms are helpful — stay away, they are usually a complete waste of time. You have no way of validating the performance of the other traders, nor should you look to others to tell you what to buy or sell. You have to make your own trading decisions.
• You Can’t Make Money Day Trading a Cash Account — give me a break. What’s the rush? Why do you need to use more money than you have in the bank? Relax, have a beer and take a deep breath. You can make a ton of money trading with the cash you have in your account. No one is putting a gun to your head and pushing you to use your entire margin. Just make sure you have a margin-enabled account, so you will not be tagged with a pattern day trading account and you are placed on a 3-month hold.
• Day Trading Charts are Voodoo — I only trade technicals with fundamental conviction behind it, and the numbers do not lie. So, please feel free to think charts are nonsense, I hope you never pick up on the fact they are the breadcrumbs of the smart money.
• Day Trading is for Dummies — day trading is not some basic course in HTML or how to write your resume. Please do not make the mistake of assuming you can pick up a book coloured black and yellow and expect to master the markets. While you may gain some foundational insight into the markets, you have a long way to go before you should ever consider placing in cold hard cash in the market. Do you ever see a book titled Plastic Surgery for Dummies? Of course not, and I will argue that trading is just as hard if not harder to master.
• Day Trading Morning Gaps is Easy — morning gaps can be your best friend one minute and quickly turn against you the next. You have to first decide if you are going to fade the gap or go along for the ride. You can really complicate matters and decide that you will either fade or ride depending on the way the market is trending. While I agree the morning gap has the action, you need a few rodeos under your belt before you decide to swing for the fences.
• Day Trading Horror Stories are all over the web — try typing in a search for day traders that have taken a bath in the market, good luck finding one. People are private about their finances and when it comes to day trading people are extra hush-hush. Who wants to shout from the rooftops that they have lost their retirement fund or kid’s college savings in the market? Just know that you may not find many stories on the web, but the stories are real. Whatever you can think of in terms of financial ruin, imagine worst. Remember to respect the market and she will respect you.
• Trading Journal is worthless — a trading journal is your way of capturing the mental state you were in the day you placed your trades. Trader’s that know their stuff will tell you that trading is primarily a game of mental toughness, clouded with technicals, tips and social media. A journal will keep you honest in terms of why you placed a trade, but more importantly, the emotions you were experiencing at the time of the trade. You can use the journal to identify when you are riding too high or low, in order to keep your emotions in check.
• You Don’t Have to Do your Homework — If you think you are just going to sit down at your computer at 9:30am and make money, you are sadly mistaken. At a minimum, you need to start observing the momentum stocks of the day at 8:30am, in order to create your watch list. This way you can have all of your monitors ready to go with the charts of interests and key trendlines you need to keep an eye on for breaks. You can also use this time to review your previous day’s trades to make sure you correct any poor behaviour.
• It’s ok to go all-in every once and awhile — do I really need to respond to this one? Never and I mean under any circumstances put all of your money in one trade. If you are wrong and things blow up on you, it’s game over.
• If the S&P500 is up you should go long — just because the broad market is going in one direction or another, does not mean you need to follow suit. Trading is about just that — trading. Since you are trading volatile stocks, all you need to do is focus on your position, while keeping an eye on the market. Nevertheless, don’t turn the market into a green light, red light experiment where you follow the broad market like a game of Simon Says.
• You don’t need to take breaks — unlike a normal job, if you don’t day trade, you don’t get paid. Just like a consulting gig, while you may not make money while on vacation, you should make enough money that you factor in vacation as a cost of doing business. When you don’t take breaks for the need to make more, you will end up losing the money anyways due to fatigue and poor decisions. Therefore, it’s better to just take the time off and recharge your battery.
• I too can day trade from my mobile phone — please stop. Your cell phone could experience a slow connection and furthermore, can you really see the chart on your phone? It may look cool when people swipe their phone at the store to pay for groceries, but everything isn’t made to be done on your cell phone.
• It’s a good idea to put on 100 trades a day — the only person or entity you will be helping by placing 100 trades a day is your brokerage firm. When it’s all said and done, you will be paying in excess of $1,800 a day for that many trades. If you figure the average round trip trade will run you $18 dollars, just take that times 100. I can think of a million things I would rather do each day with $1,800 dollars other than give it to my broker.
• I will practice trading — the majority of brokerage firms will allow you to practice trading. This would force me every day to make the tough decision of either making a living for my family or practicing. Airline pilots, cops, doctors and any other professional career requires you to practice your craft for hundreds if not thousands of hours. Why should day trading be any different?
• Your Friends and Family will understand why you want to day trade — this one is tough, but you need to realize that day trading could be something that people in your inner circle just don’t get. It’s not that they don’t love you or support what you are doing, but they will likely think it’s gambling or just nonsense and not as prestigious as being a doctor or a lawyer. Unless someone sits with you at your desk every day and sees the hard work you put into your craft, they just won’t get it. Remember though, this is ok. Trading is about your personal journey of mastering your emotions to control your own destiny. This friend is a walk you must be prepared to take alone. The bright side is that the more success you have, generally the more interested your friends in family will become with what you are doing in the markets.This will likely lead to further frustration on your end as they try to dummy down your thousands of hours to some get rich quick scheme or just luck. Again, you have to realize that without living and breathing day trading, people are just unlikely to get it.
• You will pay yourself at the end of the year — you won’t. You will simply continue to reinvest the money in hopes of making more profits. You need to consistently take profits out of the market, so the money is real to you. I am not saying you need to take 100% of your profit, but you do need to reward yourself. For starters, it will push you to make more money and secondly, the little pixels on the screen that make up your account value actually begin to mean something. Lastly, you can do nice things for those in your life. If you are able to treat your wife to a nice dinner or dress every once in a while, it makes the conversation at 9pm when you say you need to review a few more charts before coming to bed a little easier.
• Making Gains is like Pulling Teeth — if you find yourself saying this aloud, you are doing something wrong. When you are trading in the zone, the money will literally fall into your pocket with little to no effort. That’s because you have learned to accept the risk and adhere to your day trading rules.
• It’s impossible to trade without a complicated system — once you have been trading for years and have been able to consistently make profits, you will notice you will enter and exit a trade without knowing why. However, you will be able to look back and see that you exited a trade right before the trend took a turn. This level of trading intuition comes from learning to feel the market and to place trades without even thinking. This level of trading skill is reserved for the very few, so tread lightly.

Good luck trading and remember that you make your own truth regardless of what you read in this or any other answer.