By Admiral Markets
Dear Traders,
No way that you have never experienced overtrading from being overly confident right?
Like me – your answer is probably that you have.
And most likely it was when you first starting trading, because experienced traders will have already worked this out…
…they wouldn’t still be successful if they hadn’t.
Free Reports:
Overtrading is one of the worst enemies a trader can face.
And experienced traders will have already worked this out – otherwise they wouldn’t still be
You will find many definitions for overtrading – from trading too often in a short period of time, to going way above your risk limit threshold.
In my opinion, overtrading is a term coined by the weak minded who trade with emotion and are looking to place a label on their failure.
But regardless of the definition, most day traders have to deal with it and develop the discipline to overcome it if they want to survive in the Forex industry.
But for others the fear of losing money can be a bigger problem, because it keeps them from pulling the trigger as often as they should.
However, if you have a valid reason to believe that one setup is potentially less profitable than another – then there’s no reason to trade it.
Additionally, if the market has exceeded some statistical range for the day:
…then that could also be a valid reason to shut up shop…
…though this should be reflected in the rules that determine the validity of such a setup.
Obviously the market doesn’t care how many trades a retail trader has made.
Continue with overtrading and the market will slap you.
It’s like the gambler who believes that his lucky streak is about to run out, so he pushes forward until he burns out.
Recognising the signs of overtrading is therefore critical to your trading success.
The following list gives you an overview of overtrading warning signals.
I suggest you familiarise yourself with these signals, so you can recognise them and learn to avoid them like the plague.
You think that you are unbeatable, an absolute ruler of the Forex kingdom.
And you start taking trades immediately.
You forget all the rules.
There’s an immediate sense of pressure to earn the money back.
You jump at any opportunity that shows the slightest possibility.
Instead, you unconsciously focus on less-than-perfect trade setups.
You turn on your impulsive side, start taking bad setups and stay in the bad trades longer that you should.
This leads to losing good opportunities and eventually you lose focus.
It becomes a vicious spiral.
What follows is a short subscription to remedying overtrading.
This prescriptive list is not from a medical doctor:
…but it will help save you from making impulsive or emotional trades…
…that will eventually destroy your investment.
Now ask yourself again:
You have to know when the market is most likely to be active, especially when there will be volume.
No matter what you read or do, there will be moments of madness in any traders career.
Trading requires incredible discipline.
If you are slack or deviate, it will kick you out of the market and many will be gone for good.
Check out our educational webinars to learn more about avoiding overtrading and feel free to place your experiences, questions or other feedback in the comments section.
Cheers and safe trading,
Article by Admiral Markets
Source: How to avoid overtrading in the Forex market
Admiral Markets is a leading online provider, offering trading with Forex and CFDs on stocks, indices, precious metals and energy.