Please can you enlighten me the number of trades in a day, that cause overtrading? Thank you and God bless.
if your system says trade, trade. If it says don’t trade, don’t trade. If you trade when your system says don’t trade, that’s overtrading.
10 Likes
There is no calculation. We trade and do not count the trade. Some days we have more trades and some days no trader.
3 Likes
If you are a new trader; don’t open more than one trade in a single time! After a TP or SL; open a new trade according to your analysis!
5 Likes
The concept of overtrading is quite simple - if you execute trades more than should be executed in accordance with the trading system, this is overtrading. For example, if one trades crossover (the situation when faster moving average crosess slower one) and the average number of crossovers on the timeframe he is trading at is 5, the execution of 10-15 trades would be overtrading indicating that this trader actually enters the position when there is no appropriate signal, and this is one of the kinds of overtrading.
The reasons of overtrading could be different. First of all, traders could do like that trying to earn more money, makingg emotional-based trades. In long-term perspective this could lead to substantial losses. Another situation could take place when the strategy rules are not clear enough, so using this extra “flexibility” trader could apply strategy rules to the numerous situations which are actually do not fit the requirements. The best solution in this situation would be to perform additional analysis and specifiy additional rules and requirementsfor the trading setup.
1 Like
I agree with this advice - if you’re daytrading. However, if you’re a new trader, you shouldn’t be daytrading anyway. You can say that’s just opinion, but the statistics are on my side.
Entering via pre-set orders rather then clicking Buy or Sell is also a good way to avoid over-trading. So the order only gets triggered and the trade only opens when the market confirms your TA by moving in the direction you thought it would. If it doesn’t move that way, the order never triggers. your own strategy rules keep you out of doubtful trades.
4 Likes
Trade or over trade is nothing a thing that can be calculated sitting beyond you. If you got profits on at least 7 to 10 trades u must pause your trade. Take a break. If you are healthy free and the market is close to your analysis and strategy carry on more. Do not limit your trades which can impact or reflect negative some times too
I have over traded often and lost money almost every time.
Today, I use daily charts with a couple alerts and just wait for those alerts to arrive and I check a couple things before I enter.
Impatience to have a trade going has cost me quite a bit, learning some discipline and acquiring patience has vastly reduced the temptations and increased profits.
Each of us has to determine what might be over trading… it is not easily defined.
1 Like
You know what else is frustrating? Waiting days for that high probability price action signal to appear and you still get stopped out.
I cannot be the only one who has experienced such.
I have experienced similar… often. lol
From my experience with trading thusfar i’ve learned it is best to stop after a nice profit. Otherwise I tend to get overconfident in my capablities and lose my profit again. Also, as i trade part-time and have a job to attend too, not having many trades open gives me a lot more mental rest. I’d say i make maybe one or two trades a week.
Basically entering and exiting a trade too often gets you to pay alot of spread. If your profits are bigger tho, it could still be a good trade. However you should remember that riding a 100 pip wave with only one entry and exit is more profitable than riding that wave with 4 or 5 exits and entries.
1 Like
Awesome answer
1 Like
Over-trading will depend on your trading and financial capacities actually. What a pro trader believes to be normal course of action may not the equal to a beginner’s normal number of trades. Every trader must therefore try to manage his funds according to his abilities to work with.
1 Like
Always trade as per your system or plan or strategy which you are following. Over trading may kill you account balance.
I’ve popped my head in on this thread a few times since it was started hoping to see somebody enlightening the OP but nothing so far so allow me.
The term overtrading has nothing at all to do with the sheer FREQUENCY of trades in any given day. If you know what you’re doing then it doesn’t matter how many or how few trades on any given day as long as you’re making an overall profit of course. The term overtrading specifically refers to having TOO MANY OPEN TRADES AT ONE TIME such that too much margin is being reserved for those open trades and therefore putting you at risk of a margin call. This being said: the term is sometimes also used to describe trades that are far too big for your account size (although one could argue that this is the same thing really).
The golden rules (at least so far as I’m concerned anyway but are indeed recommended by J. Welles Wilder Jnr.) (look him up) below. And please note that these figures are for NO LEVERAGE so you’d have to recalculate especially for those of you that are hell bent on trading with ridiculously high leverage (but it’s worth the exercise because I’m willing to bet some decent amount of cash that following these rules would preclude most here from trading AT ALL).
- Do not margin more than 15% of total capital on any one instrument (and I’m guessing that in all of your cases that means one FOREX pair).
- Do not margin more than 60% of total capital at any one time.
Once again: the above based on NO LEVERAGE i.e. 1:1.
Note also that I’m talking about percentage of MARGIN i.e. NOT RISK
Follow these rules and most of you will last a lot longer in this business.
3 Likes
Yes and new traders should spend such a long time to discover their own trading style and lane.
I think that Dpaterso provided very nice explanation of meaning of overtrading. It is something that should not be mixed with your ordinary strategy and number of trades which you are conducting during course of your ordinary strategy execution
In my view number of trades should be proper you not feel get tired and bored . It is not necessary when you are free and pen terminal all the time do trading . Just set your target find favorable market and try to get this target if possible. After it not be greedy to get more profits. Over trading is a way of disaster you not get idea when to sop. Be relax and contented what you get from your prior trades then do trading for any other day .
It is all about our analysis and plan that how we work in this market. If we found more trades then we are going to work for it, is that simple.