If you are not sure if you are over trading, there is a high possibility that you are. In fact, many traders that do not make money consistently in this market are over trading without realizing this fact. The problem with this habit is that it has a way of taking you over without your knowing it.
Forex training tips: How to know if you are overtrading
For instance, if you primarily trade off the daily charts, but find yourself going down to the lower timeframes more frequently, you are probably about to slip into the dangerous habit of overtrading. Any trader who spends time analysing the 5 minutes charts is already 60% deep into the overtrading disease. On lower timeframes, you will be sucked into taking tons of trades that you could have easily avoided if you were trading the higher timeframes.
Secondly, if you jump into taking additional trades simply because your present trade is in profit and you have moved your stop loss to positive territory, you are overtrading. The situation is worse if you jumped into the trade without any clear directional confirmation.
There are several other examples we could throw in; but the simple truth is that many traders are simply unaware of the fact that they are over trading .
Stopping overtrading can only be achieved by catching it early
As we have already seen above, it can be very difficult to know if you are over trading; and so, you have to be counteractive by planning what you are supposed to do in the market early, and planning the specifics of your trades in advance.
The second way you can eliminate over trading is to avoid entering another position until all your open positions have been closed out. Many traders simply jump back into the market as soon as they have closed one trade, forgetting that any of the other open trades can quickly go against them, thereby magnifying losses and taking out the profits that may have caused such excitement in the first place.
Similarly, you can make it a point of duty to avoid entering positions on the same pair until a counter signal appears. So for instance, if you just closed a buy position on the EURJPY, don’t go jumping back into the market in a bid to continue riding the trend. The trend may have just ended at the point your take profit got hit and you took that trade! Instead of entering another buy order, wait for the first sell order you get. Of course the sell order may be short-lived if the trend is strong but at least, you will take the loss knowing that the pending bullish continuation will more than pay off for the lost trade.
Focus on your schedule and go through forex training not just to know more about the market, but also to know more about yourself. The best forex training will help you be an all round better trader.
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