Avoid overtrading at all cost is the simple and short message.

“Quality over Quantity” is a famous mindset, especially among those who know what they want. Thankfully, it has inspired many to give only their best, giving birth to those perfectionists who make the world function in better way. However, saying it is easier than adopting it, and that is especially important in trading the financial markets. Many traders fall to the belief that constantly placing trades is always the right way to trade. Imposing their system, strategy or even their will on the markets, I certainly went through this period for a while!

Overtrading may make sense at first, as in trade more, make more but once you analyse it, you realise the huge faults behind it.

That is exactly what we are going to be going over in this article.


  1. Is Scalping Overtrading?

Scalping is a term referring to a trading approach; it consists on trading with a higher number of trades for a minimum amount of time. This can be from seconds to minutes.

Whereas medium and longer-term traders can hold positions for days, weeks or even months, human scalpers’ positions usually last minutes. Therefore, some could argue that scalpers overtrade, yet the rest can also counter it by saying that scalping does analyse and apply the basis of a strategy.

Rightfully so, scalping should not be considered overtrading just for being quantious. Scalping requires market research and specific conditions for it to be utilised and applied successfully.

But, if that is not overtrading, what is it?

  1. Overtrading: Trading For The Sake Of Trading.

That is the term that best explains what overtrading is. Taking average conditions and applying your strategy for the sake of being in the market.

Overtrading is not so much an approach to trading as it is a vice of trading. In essence, the term refers to placing trades that are really not necessary—if not downright harmful to your capital gains.

Investors who do this believe that not-trading is always worse than trading wrong, for it does not earn you money nor experience and exposure. It is often triggered by the fear of missing out on opportunities, which is whole other subject matter on its own.

That is why medium and long-term players can also overtrade even if they place only one unnecessary trades for  weeks.

  1. Why Is Overtrading Harmful To Your objective?

Firstly, you have the obvious damage: it hurts your capital, for overtrading places money at risk when it does not have to be.

Secondly, you have the fact that overtrading is often the result of not analysing conditions correctly, so traders are also leaving behind their correctly applied methods and market knowledge. That-in turn-can make you forget the fundamentals of trading, which make traders what they are.

Thirdly, you get used to applying the bad habit. Traders can make it a habit to place trades when they have no open positions just to fill that space of boredom. This becomes worse the more you do it, the more you suffer the previous two consequences.

Finally, you will spiral into a an unconfident mind set and when the correct condtions present themselves you may not take the trade that could make up for some of the losses on the unecessary trades.

  1. The Benefits Of Trading Smart.

To stop overtrading, all you need to do is study the market and youself think about your moves before doing anything. Overtrading has nothing to do with trading a lot and everything with trading unnecessarily.

As such, by trading only when you know you must, you:

  • Have more successful trades.
  • Get more time to analyse and think about future moves.
  • Build confidence (very imporatnt)
  • Risk less capital, which, in turn, means more possibilities of bouncing from lost positions.
  • A smaller drawdown
  • Practice market analysis, which strengthens your ability to know when to trade and what condtions.
  • Learn to adopt the discipline and make the good habits necessary to be a successful trader.

Have you found yourself overtrading? Do you want to prevent it? Or do you feel like there’s room for improvement and want some guidance?

Look no further, join the Able Swing Trading membership sign up to our website and we will help you achieve just what you want!