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

I also work a lot on my strategies and always double check before trading.

Overtrading may cause a lot of problems for the trader, like, the decline in sales and costly purchases, poor credit, difficulty in raising funds, etc. Greed and emotion should not rule analytical capabilities as it increases the chances of loss.

I could not have agreed anymore to what you have just mentioned. As it is, ‘excess of everything is bad’ so there are loads of repurcussions about the over trading.

Over trading leads to extra losses. That’s the biggest disadvantage I can think of.

Over trading is definitely an issue for most.

This article about having realistic goals for forex trading might help with some useful insight to those who are interested in learning.

The biggest problem is that you invite unnecessary risks.

Great post. I am also a big advocate of this.

Yes, the biggest cause of over trading is our emotions. To deal with them, simply avoid those trades that are not giving you the minimum risk to reward ratio. Secondly, don’t panic when you hit a loss. Start thinking right away on how to improve it. This way, you will see you cut half of your positions.

Thanks for sharing this. It becomes a trader’s responsibility to keep a check on their emotions while trading.

Over trading leads to poor decision making, poor trades and hence more chances of loss. As a trader I have struggled big time over trading, so the sooner you realise that this is actually bad, the better it is. When I started maintaining a journal and trading plan, i was able to control my over trading.

Over-trading can lead to losing more. In general, over-trading is a result of trading when you have made a loss and you expect to recover it by trading more. But as your emotions (anger and greed) mix, you may not perform very well in such a situation and may even lose more than you would have otherwise.

The biggest problem with overtrading is that it ultimately leads to losses.This could happen due to poor money management. You may also lose the support of your supplier once you start losing.

I totally agree with you. Overtrading is very common among new traders. Just for the sake of earning more and having profits, they indulge in overtrading. Then they have to face the consequences of it as the account gets blown. Rather traders should aim at gaining consistent profits by sticking to a backtested trading plan.

Thanks for the pointers here. Definitely helpful. Personally it’s always the psychological issue of wanting to recover the loss that has pushed my balance further down.

Hi
Thank you for the advice! But the question of over-trading can intensify into a bigger problem. If the company cannot satisfy its customers, the customers pass negative reviews about the company. With the different social media we have around, negative comments can travel as fast as light these days. Before the interesting company gets to know about it, the lease must have been done. It may take a lot of investment in media drives and promoting before the company can control the destruction and then win the centers of its customers back.

Overtrading can basically blow your account and your confidence too. It is not a good idea as you would basically be trading based on your instinct and not really taking care to analyse the market and trednds so well as you will be more inclined to rush.

In my opinion overtrading is an issues of all who start trading. It’s really difficult to understand when you need to take a break from trading. I believe that you’d better do several deals per day and gain a little profit rather than do lots of delals and go negative. I think that couple of wins per day should be like a border, like okay I’ve done two successful deals for today so I am gonna end the trading day to exclude blowing of my account. It has to be a part of strategy, you know, because losses cause stress and it’s kinda hard to handle it and continue trading after a chain of losses.

A lot of traders, even professional, from time to time face “over trading”, I guess that’s because this activity always bring a lot of stress for traders. When you start understand that you’re tired of this activity, you’d better distract from it on an uncertain time, until you organize your mental health. I believe that it’s okay for every trader sometimes to be burnt out. Even if you’re a master of emotions control and know trading psychology very well it doesn’t defend you from over trading. You should always distract from trading in order to prevent the further deterioration of your mental health, because it’s fraught with bad consequences.

Absolutely. Everything depends on the personal wish of a trader, whether he/she wants to trade or not. I guess that overtrading is such an issue which makes lots of traders leave trading activity and never return to it. It’s sad. The main thing every trader has to do is never give up, even if he/she faces overtrading, he/she must understand that it’s just a transitional stage in their activity and trading check them on endurance, you know. Of course there are lots of tips which can somehow influence and prevent overtrading. To my mind, the main tip is the complying with the regiem of work and relax. The vast majority of issues not only in traing activity are caused by the violation of this regime.

Over-trading is either:

  • taking any trade outside of your trading plan, or

  • taking any trade which cause you to exceed your maximum risk limits.

When you are doing this, there are chances that you are gonna lose your capital.

You can refrain yourself from over-trading by following these below mentioned points:

  1. Have a trading plan
  2. Refrain from trading all-day
  3. Limit the number of trades per day
  4. Take time-off after a serious loss
  5. Set stop loss and take profit limits to your trades
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