There are two types of traders: retail and institutional. Each has its pros and cons.<\/p>\n
I’ve been fortunate enough to have experience as both.<\/p>\n
For some insight, my trading career started off with about $60,000. I had just quit my cushy corporate gig and liquidated all the stocks I received as bonuses.<\/p>\n
A few years later, I was part of a three-man trading team that was managing millions of dollars.<\/p>\n
I quickly discovered there are as many ways to trade the market as there are traders…<\/p>\n
A hedge fund will run their money very differently from how most individual traders go about it.<\/p>\n
But I realized that different doesn’t necessarily mean better<\/em>.<\/p>\n Hedge funds and other institutions have the kinds of resources at their disposal that most retail investors will never have. But retail traders have an enormous advantage…<\/p>\n Their smaller size makes them more nimble and agile.<\/p>\n When you’re a hedge fund, overseeing millions (or billions) of dollars can make it tough to deploy all that money quickly and quietly. And it can be tough to get out of a trade.<\/p>\n For instance, in 2018 I was running a U.S. dollar (USD)\/Japanese yen (JPY) currency trade that was worth about $200 million.<\/p>\n When it was time to take my profit, I couldn’t close out the entire trade at once. So, it took almost the whole trading day to unwind the entire position.<\/p>\n However, I don’t think retail traders need to try to go toe-to-toe with the big guys. In terms of resources, it’s almost impossible to compete.<\/p>\n Instead, we should trade in a way that plays to our strengths and not to our weaknesses.<\/p>\n