Individual traders, like you and I, are called retail traders. Retail traders can be part-time or full-time traders, they are just not working for a firm or managing other people’s money. Retail traders are a very small percentage of the overall market volume. Then we have the so-called institutional traders such as Wall Street investment banks, proprietary trading firms (called prop traders), mutual funds and hedge funds. Most of their trading is based on sophisticated computer algorithms (algos) and high frequency trading. Humans are rarely involved in the day trading operations of these large accounts. Institutional traders have considerable money behind them and they can be very aggressive.
If you are like me you are asking “how can we compete against institutional traders and win”? Retail traders do have some advantages such as we are free to trade or stay out of the markets if we deem that the best option where institutional traders must trade. Banks, for example, must be active in the market and trade large volumes of shares at almost any price. An individual trader is free to wait for the best opportunities to arise.
I am assuming you have heard that 90% of all traders fail. This is a big advantage retail traders have but most squander the advantage by overtrading. If you want to experience success in this game against the giant traders you must develop patience and eliminate greed. This is where my military experience has given me the edge. I have great self discipline and it helps me from overtrading. This is what kills most traders. Its not the Wild West as many traders make it seem. Start treating trading like its a business and get in that mindset.
Another big advantage we retail traders have is we can exit losing trades very quickly. Always have a plan when you enter a trade. Do not trade blindly. Institutional traders have massive blocks of stock and if its a losing position it can take quite some time for them to exit the position. If the markets are flat then high frequency traders are ruling the roost that day. Retail traders must learn to exploit the advantages that are presented to them.