If you can't keep your emotions in check when trading, you will lose money. Lots of it. Pipsychology was created to help minimize this from happening to you. The most significant action that you can do to improve trading profits is to work on yourself. Really knowing yourself and how you think can give you an edge that others in the market don't have. My goal is to share practical advice to Don't overtrade.
Focus on the quality of each trade, not on the quantity.
One of the hardest lessons for a trader to learn is not to overtrade.
You will lose BIG if you continue to overtrade.
Every time you enter the market, you expose your capital to the market. The more you expose your money to the market, the better chances your money will part with you.
Also, the more you trade, the more execution costs you pay, mainly the spread.
The most common misconception among new traders is that they have to constantly be in the market.
Wrong.
By being in the market all the time the trader does not give him or herself a chance to pause and will eventually lose because of the unfavorable market conditions.
If you don't see any trades, stay out. Don't force trades just because you feel you need to be in the market.
Trading out of boredom is the worst reason to be in the market. You have to be PATIENT!
Patience is one of the keys to becoming successful trader.
Patience will keep you from overtrading.
Patience will give you enough time to observe and look for a potential setup for the next trade.
Remember it's not the quantity of trades you take, but the quality of your trades you take.
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- Be Humble 11:32 04 February 2009
- Don't Set Yourself Up to Fail Yo 01:10 24 May 2010
- Forcing Trades 03:15 11 November 2009
Archived Comments (7)
Simple but true. Cheers
I agree. Trading too much is a psychological aspect of trading that is hard to break. After manually trading for years, I finally started to make money by following trading rules used by professional commodity traders like Richard Dennis. These rules make it pretty black and white about when you should trade, how much you should trade, when to exit, stop losses, etc, etc. This system is very simple, but it has worked for years.
Absolutely true, because to over trade is a very bad habit in trading forex. that's another good one keep it on.
As a new trader, I have definately been affected by this despite being warned against it. I'm much more controlled now but still have a way to go and to have this issue highlighted again is a definite benefit. Cheers
As a new trader, I have found the biggest risk in trading Forex so far to be myself. I'm only trading virtually (just as well) but I have check points now to protect myself from myself so to speak. This is what I have so far:
1. No more than two trades a day.
2. No more than two hours at a time in trading.
3. No more than a certain percentage in profit in every trade. (Still not sure what the percentage is yet but anyway).
4. Stop losses. Essential!
I guilty of this, i always feel i have to be in the market, thanks for these insight
deanbo is right. The big question for me so far is how to be discipline to the rule that we made, like deanbo made.