I cannot agree less with you. Now what happens is, if they’ll have any loss, they will get demotivated and maybe they won’t even trade after that.
Overtrading is dangeruous. Sometimes people overtrade because they are getting profits back to back and sometimes its revenge trading, that is when you trade to overcome your losses. Please don’t let these two situations fool you as the market is very volatile and you cannot predict the market’s direction a 100%.
I think greater focus on better RR trades might help with this. If you’re winning less than 50% trades but still in profit then the win ratio starts to lose significance since the emotional attachment is to the financial impact of losses.
Excellent piece of information! Exactly what i needed to hear.
Just last week, i was scalping very little pips and i had it locked, successive wins up until Friday. I became overconfident, became greedy and felt-i-know-it-all. So hehe increased my position size, leverage, and number of open positions, you guessed it right! that was the demise of my ego and my account crippled. i was humbled by the market. Not only did i blow out all the profits i made for that week i also managed to lose 50% of my initial deposit. imagine the pain!
Lesson:
- (overtrading + overconfidence) emotion = crippled account + blow out
- position sizing, leverage and STOP LOSS must always be carefully calculated before entering trades at all times. (Risk management)
- never risk money you cannot afford to lose. keep risks at a minimal (1-2)% per trade. though this is not ideal for small accounts. 5% would be safe.
- never think profit, think loss first then build from there.
GOOD TRADING!!
SIGN OUTT!!
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Exactly. That’s why I always believe that people should focus and invest more time in making strategies and modifying them so as to have good benefits. I have invested a lot of my time in doing the same and trust me, sometimes the strategies worked and sometimes they didn’t. So I have modified them a number of times, and thankfully my brokers Turnkeyforex and IG are flexible with different strategies.
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.