What Are The Problems Of ''Over Trading''?

[Akio19]

Thank you for great explanation buddy!

[Tretrader_1]

Over-trading brings lot of stress to the table so I always try not to indulge in it.

[ribspiece]

• Stress
• Burnout
• More stress
• Insomnia
• Bankruptcy

The problems can get worse than this if you don’t put a full stop to it. The biggest problem is that most of us don’t even realise that we are over trading. We just go on and on without thinking much about it. And I am not exaggerating with bankruptcy here. I have actually seen people losing their life savings by over-trading.

[Angerism]

Zen, thank you. Our emotions are extremely important in trading and in life in general. Controlling them allows you to be a super trader!

[tommor]

There’s a specific forex over-trading problem, as we only have 8 major currencies on the watch-list. Several behave similarly to each other over longer time-frames; several of the economies behind them are heavily inter-dependent.

So, often moving together -
EUR and GBP
AUD and NZD
EUR and CHF

Usually low volatility -
AUD/NZD
EUR/CHF
EUR/GBP
EUR/USD

This can mean that 3 or 4 simultaneous trades across different pairs turn out to behave like one big position. This does no good for your risk management.

[greenscorpio]

Some good points, though first we have to establish what trading style(ie daytrader ect ) the majority on here want to trade.Many on here will be trading with leverage, with patience and some experience you can make good profits with just 1-3 trades a week(only holding one trade at a time and closing the trade end of NY session or before.

Obviously market conditions are more unpredictable than usual.Its misleading newbies expecting them to find so called trends consistently

[Tretrader_1]

Emotions should be kept in check in order to be successful at trading.

[PhyllisD_44]

The most common mistake traders do is overtrading. Traders should take small risks and learn from their past mistakes.

[Tretrader_1]

Over trading leads to over stress.

[Redex2]

Yeah, and it can even lead to losses in trading as well.

[Niamh.34]

Over trading can lead to emotional stress & poor decisions.

[Tretrader_1]

So, can you share some tips to manage emotions while trading?

[Madison97]

Over trading can lead to a lack of focus on the bigger picture, as traders may become preoccupied with short term fluctuations in the market.

[Investfox]

Ultimately, over trading can lead to insolvency and a business failing . A shortage of cash and unsustainable borrowing can also negatively impact on the quality of your service or products.

[Amelia6]

Over trading can lead to taking on unnecessary risk, as traders may make impulsive trades without properly assessing the potential risks and rewards.

[Eloise_1]

Yeah def, over trading can also be a sign of undisciplined trading. When you trade too frequently, you may be acting on impulse rather than following a well-defined trading plan.

[The_enigma]

That’s a cool neuroglial way to explain it. For the solution, I like to set a checklist of my trading criteria and stick to it.

This includes:

• Short/ Long bias. If you trust the market will be positive in the long-term, you have long bias and vice versa.
• The appropriate trading size, risk management strategy, and profit target.
• Technical setups that support your bias, such as a head and shoulders pattern for a short bias or a bull flag for a long bias.
• Confirmation
• The best price to enter the trade

[stacy77]

Over trading can lead to a lack of focus and discipline in executing long-term trading strategies.

[ArnavDeshmukh]

How wisely this is described and I accept your opinion and agree with this way of thinking.

[AnalyticsTrade]

@BSB-Zen

Hello all,

Most of the traders couldnt handle their emotions. So they are going to martingale or taking too much trades till it goes in the right way also called as ‘‘over trading’’.

Why are people attracted to this?

The answer is simple, it is in our mind and brains.

• Winning trades releases Adrenaline and Dopamine… This gives you extra confidence. This is a feeling you like and your body gets addicted to so you fight next time to win again and again. But the market will defeat you sometimes and this is where it gets dangerous. So be aware of that please.
• Losing trades releases Cortisol. Especially in situations with high stress. Executive functions that help you with advanced thought processes like strategies, shut down. And the Amygdala, our instinctive brain, takes over. This is known as a ‘’Amygdala Hijack’’ The body makes a chemical choice about how best to protect itself. In this case from the shame and loss of power associated with being wrong and as a result is unable to regulate its emotions or handle the gaps between expectations and reality. This makes you over trade or martingale and destroy your account. So you have to stop yourself from an ‘’Amygdala Hijack’’.

Mine advise would be: Set your manual stoploss at around 2 per day or session. Understand that if you hit your stoploss early, the market are not conducive to your strategy and you will lose more if you continue. Your emotions paralyze you and your biggest enemy. The goal is to slowly desensitize yourself to wins and losses.

For example: 1 win per day is 22 wins per month. So focus at first on 1-2 trades per day and by end of month its many wins. Low volume, high itm trading.

Hopefully this will helps you more with trading.

Greetings,

BSB Zen.

Great insights on the problems of over trading! Emotions can easily lead traders to martingale or take excessive trades, which can be dangerous. Understanding the chemical responses in our brains, such as the release of adrenaline and dopamine from winning trades, and cortisol from losing trades, is key. Setting daily or session-based stop-loss limits can help prevent over trading and managing emotions is crucial. Focus on quality trades rather than quantity, and slowly desensitize yourself to wins and losses. Thanks for sharing these helpful tips!