Most traders are only looking to trade. They disregard the fact that the market will continue to exist tomorrow, the following day, and for the next 10, 20, and 50 years out of fear of missing out on the next big thing. Stop fretting since the market always repeats itself, which implies there will soon be another opportunity.
Even though many people trade and act as if this is their last day to do so, it’s not! The most common cause of failure for traders is overtrading, which is both a “cancer” on your trading account and an obstacle to your aspirations.
What is Excessive Trading?
You may be overtrading if you see that you are continually making new forex, futures, and stock deals, obsessing over your trades, or spending most of your time analyzing the markets. Overtrading has a variety of drawbacks, but the main one is that you’ll lose sleep and money quite frequently.
We have traded with our Supply and Demand trading strategy that last weeks, months, or even years. Only roughly six to ten times each month do we normally initiate new trades and investments. We also choose our trades and investments extremely carefully, ignoring those that do not conform to our present set of rules.
Trading Too Much Erodes your Trading Edge.
Your chosen Supply and Demand trading method will only be applicable to a certain amount of trades. Your trading edge will be diminished if you consistently break your own rules and trade and invest in anything that comes your way. Having a trading edge boosts your chances of success, and placing poor-quality trades will lower your edge until it is completely random and non-specific.
Quality Trades vs. Market Noise
In the financial market, there are market noise-related distractions as well as trade setups with low risk, big payoff, and high likelihood. The essential idea here is that you need to understand the distinction.
Your trading edge will be further weakened if you enter trades that are not worth risking your money on due to your inability to distinguish between legitimate Supply and Demand setups and market noise.
Make sure you fully understand what you are doing before you start risking money on the currency, futures, or stock markets. To avoid overtrading, you must sufficiently educate yourself and equip yourself.
Everything that is in Excess is Bad.
If you look at several human endeavours, including trading and investing, doing too much or becoming obsessed with it is typically a negative sign and most of the time results in an unfavourable conclusion. We’ve all heard how unhealthy it is to consume too much soda or McDonald’s, but you should also be aware that excessive water consumption and exercise can be just as harmful. Obsessing over your loved ones might sometimes make them turn their backs on you because it conveys neediness and is just plain bothersome.
One fact is that consuming too much of anything can be harmful or fatal. Your trading account will be destroyed if you overtrade. We are mentally wired to become dependent on a variety of things. One thing unites drugs, gaming, blue light, junk, alcohol, gambling, and trading: they are all dangerously addictive.
We have a built-in tendency to become addicted to a wide variety of things, which is an evolutionary feature that served humans well thousands of years ago when they were hunter-gatherers. However, due to the numerous diversions and temptations of contemporary culture, this quality has recently turned into something harmful.
If control is not exercised, the once-beneficial feature could suddenly be fatal to us.
A feel-good hormone called dopamine is released when certain conditions are met by our brain, which operates on a reward-based basis. Dopamine is released when something makes us feel good, and when that feeling passes, we typically have a yearning for more. Drugs like cocaine or heroin produce that feeling, and despite the fact that we are aware of their negative health impacts and all the negative side effects they have, we still end up using them despite knowing how dangerous they are for us. Now, other beneficial behaviours like exercise, which is safe for our health, also release this feel-good hormone.
Armed with this essential knowledge about how the brain functions, the appropriate thing to do would be to deliberately train our brain to get addicted to positive thoughts and habits rather than becoming hooked on bad or negative habits that would really contribute to our overall success.
As traders and investors in forex, futures, and stocks, we now have a laptop in front of us that displays charts and numbers, and we can place a deal by simply pressing a button.
This is precisely how overtrading begins: when we place a few trades and make a profit, it feels great, and the brain enjoys that sensation. As a result, we feel compelled to place additional trades to recreate the feeling, and we gradually develop an addiction to the high it produces.
Planning your deals in advance and sticking to a supply and demand trading strategy is the only surefire approach to avoid this. In this way, your trades are prepared in advance, and these predetermined standards will guide how you act in the FX, futures, and stock markets.
If you don’t do this before you begin trading, you’ll find yourself racing after every deal to experience the high of success, which will only result in further losses and a depleted trading account.
Solution For Excessive Trading
Our online trading academy’s expert traders have been trading for a sizable amount of time, and we have had the pleasure of training new traders who have gone on to become full-time traders or have been able to use trading and investing in the forex, futures, and stock markets to sustain a second income. The tips we’re about to give you are based on our many years of expertise as experienced traders and on observing our online trading academy students successfully trade and invest. It is in your best advantage to heed the advice because doing so will enable you to recover from the overtrading disease that is likely wreaking havoc on your trading account right now.
Set a cap on the number of FX, futures, and stock trades you make each month; it should be between 1 and 10.
Some components of your supply and demand trading strategy will be rigid, and within the rigid components will be some extremely flexible components. For instance, there may be some flexibility in how you start a trade, how much you risk every trade, or where you put your stop. However, the number of fresh FX, futures, and stock trades you enter in a month should be between 1 and 10. Anything more than that is probably an indication that you are currently overtrading.
Apply the relevant criteria and wait patiently for situations that fit your supply and demand trading approach.
Filters are the items you keep an eye out for while deciding whether or not to make a forex, futures, or stock trade. The emphasis is on low risk, high reward, and high probability forex, futures, and stock transactions; therefore, you should be patient and wait for them rather than squandering your money on unprofitable trades. You have a limited trading account, much like a sniper has a limited supply of shots, and therefore it’s best to exercise prudence to prevent blowing through all of your funds on poor deals.
Get a live Trading Strategy and Set it and Forget it.
Because they don’t give their transactions enough time to develop before entering another one, forex, futures, and stock traders and investors frequently engage in excessive trading. Always keep in mind that worthwhile trades and investments take time to pay off and do not do so immediately.
You must have the patience to wait if you want to profit from major market movements. One method to achieve this is by establishing and leaving your stock, futures, and currency contracts.
This raises your potential for low-risk, high-reward trades and lowers your vulnerability to the market’s attractions. Please read this post HERE to learn more about our “set it and forget it and get a life” strategy.
Specify Just Unidirectional Market Movements.
Many traders and investors in the forex, futures, and stock markets have a propensity to place trades when the market is choppy, and as soon as it begins to go against them, they place another transaction. The unpleasant sensation of financial loss combined with the dopamine rush will lead to a great number of poor choices. You are less likely to overtrade if you trade in a market that is clearly heading in one direction.
Expanding your Trading Operation
At our online trading college, we make sure that every student follows a milestone plan and is evaluated against particular KPIs. They are only allowed to increase their dollar risk per trade once a specific goal has been accomplished. You ought to comprehend the significance of consistency as a new trader. The amount you risk per trade can be gradually increased after you are consistently profitable, but if you prioritise generating money over forming the appropriate habits, you’ll probably end up losing money.
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