Overtrading?

What is overtrading?

I am 6 months new and still in undergraduate pip school. I have had about 300 demo trades and maybe 120 live trades.

Here is screenshot of my current live account. Is this overtrading? I am a bit nervous as I have more setups in the making that I want to add. I suppose if this happens after a few days of draw down, then it is ok and even better if each trade were at least with 2 lots or something.


That doesn’t really sound like “overtrading”, to me.

It sounds “about right”, I think. (I always instinctively think that for most people’s trading methods and styles, something like 300+ demo trades spread over 6+ months on demo is probably going to be quite suitable.)

My own understanding of “overtrading” is that it means “entering large numbers of trades without actually knowing, or having valid reasons to believe, that the trades are of a type that genuinely has positive expectancy”. That might just be my own interpretation of the word, though, because I tend to look at things “statistically”.

It’s much too small a sample-size to make any judgments from - but from the little sample you’ve shown, it doesn’t look like “overtrading”, to me: you’re apparently making more profit from your winning trades than you’re losing from your losers, anyway, which must be encouraging?

The way I always look at it is that I have my “edge” against the market, and I just want to exercise it as often as I can, on the simple grounds that the more trades I do, the more profit I’m going to make, as long as the trades always have a collective “edge” (“net positive expectancy”).

Thanks for the reply.

Sometimes is is not easy to keep the poker face. I try to manage the trades well by doing thing like moving SL to break even soon as profit reaches 50 pips, move SL to +50 when profit goes over 100pips etc.

What do you mean by “It’s much too small a sample-size to make any judgments from”?

I understand the principle - I do something similar, but in two other ways …

(i) I manage the stop-loss movement according to the volatility rather than according to a fixed number of pips;

(ii) I “divide” the trade into parts, and close some proportion of it earlier than the rest - either at one point, or two different points, after it’s moved in my favour - letting the last part run (if it will) after guaranteeing some profit on the overall trade

I just meant that it’s hard to draw conclusions from only 9 trades (shown above), but your own overall picture of what’s happened will of course be a better and clearer one than what one’s conveniently able to show in a forum image.

O ok. I just posted the trades I am current in as my question were if it is over trading if I have that many trades running at any one time?

Ok - sorry: I may slightly have misunderstood your original question (“overtrading” usually means “entering trades too often”, but I see now that you’re referring to total simultaneous risk-exposure!) :8:

I see your point: it’s easy to do this inadvertently, with forex, since currency-pairs tend all to be to some extent correlated (either directly or inversely, so it matters which?). That mostly depends on your position-sizing, i.e. risk of loss in proportion to your total account-size.

For myself, I never have more than a total of 1% of my account at risk at any one time. So if I’ve added another 1% to a winning position (which I sometimes do) it’s only after moving the stop-loss enough for only that most recently added 1% to be at risk.

I’m not saying that the “1%” is an immutable figure that should apply to everyone else too, of course (that will depend on the size of their “edge”), but I think the principle’s valid, in that you shouldn’t expose to risk at the same time more than whatever proportion of your account meets your own risk-management parameters, degree of risk aversion, acceptable drawdown, and so on. (For myself, my blood would freeze and I might collapse, if I ever had a drawdown bigger than 5% of my total account, and even that would be very hair-raising and unpleasant indeed.)

Depending on your trading style, of course, it may be possible to mitigate the risk. For example, if you’re trading GBP/USD and USD/CHF at the same time, either both long or both short, that [B]reduces[/B] risk because the two pairs are inversely correlated (i.e. you’re effectively long on the USD in one trade and short on it in the other), whereas if you’re trading USD/CHF and USD/JPY, both long or both short, at the same time you’re [B]increasing[/B] your risk, because changes in the value of the USD will have more or less a double effect on your situation. In short, it’s all a little bit more complicated than it looks.

In short - there’s nothing wrong [B]in itself[/B] with having 9 trades open, but if you’re actually risking, say, 9% of your account at a time, that may be [U]terribly[/U] dangerous.

Sorry if I haven’t answered your question very helpfully, here! :8:

Over trading might if still newbie will making confused how to manage all order that opened, will better for learning purposes as newbie they learn plan simple with use risk reward ratio like as using 1:1 which if stop loss use 20 pips hence target also 20 pips too

Heaven forbid that you should ever actually [B][U]read[/U][/B] a thread, before replying to it, Bearish. As is so often the case, your comment has [I]absolutely nothing[/I] to do with the OP’s question at all (not that my own first attempt exactly hit the bulls-eye, on this occasion, admittedly) …

Thanks for the reply. I came hear to learn. I had to ask the question as I became a bit better with keeping a poker face, but I find that my heart starts racing slightly when there are many trades that I have to manage at the same time.

Sometimes I want the market to take out my trade if it is not really moving. Like earlier I were long in EURCAD which were not really moving and then that news spike took me out. My plan was to break even on the trade, but lost about 15pips which was ok.

The reason I take trades as they come along, is because I planned the entry hours and sometimes days before the move that I anticipated comes around. When it comes, I take it else I miss the train and might have to battle with myself wanting to take revenge.

Ooh, well - to answer your question, this can be [I]very[/I] high risk, and [B]is[/B] really a kind of overtrading, because sometimes those are going to be a lot more than 15 pips.

The particular risks of major news announcements (and perhaps especially US ones) are that they’re exactly the times your broker may not be able to honour your stop-loss (because of fast-moving markets), and that they can affect several pairs at exactly the same time, so if you have multiple positions open simultaneously, you can very occasionally face a huge loss without being able to control it. :eek:

People vary a lot, regarding the extent to which “fear of missing the train” affects their trading. The reality is that there will always be other opportunities.

Over-exposure to risk is in fact a much more realistic thing to fear, because actual losses are worse in their effect than missed opportunities.

I have no real “psychological insight” into others at all, but I strongly suspect that “fear of missing out” is (at least to some extent) an indication that aspiring traders are [B][U]not[/U][/B] instinctively looking at their trading as an exercise in [I]risk management[/I], but are more concerned with maximising profit … and that’s something they should try to change, because in the long run it’s not going to do them any favours. :33:

Thanks for the good tips.

Trading too much under the influence of emotions is considered as over trading…

If you are trading according to your trading plan, then you are not over trading. Its only when you trade just to remain in a position, you are over trading.

Over trading in Forex is not good as it affects the growth easily. You have to trade slowly in order to get good result. Forex market is not running anywhere. Many people think that it is good, but indeed it is a bad thing.

My own understanding of overtrading is that occurs when a trader takes on too many trades without being able to handle it, neither in terms of risk management, nor from a purely psychological standpoint. In other words, when they bite more than they can chew.

Over trading occured might because any trader only tempted by price movement, and as trader have no plan in their trading and usually over trading occured because they want to making profit with take all opportunity but as trader less consider with risk management and only causing confused if we over trading

Thanks for the good tips.

As easy as that.

Summed up in 2 sentences.

Most of the traders are greedy when they are getting profit . They want to get more and more at the same day . This thing is over trading when they do trading after getting their target or do not act upon their plan . I do not like over trading want to do that much in which I do not feel bore with trading.

When you are not comfortable with multiple trading pairs, then it would be effective for you to add new trading charts gradually! Even, one single trade position can be dangerous for your capital if you use aggressive trading lot size! But, trade with multiple trading pairs if not bad actually if you have good trading strategy or proper knowledge on Forex market!