What is Over Trading?
The Mistake All New Traders Make
(Read more about me click here)
The difference between success and failure in my case.
If you are a new or a struggling Forex trader then I can understand why you asking the question of what is over trading?
It’s confusing out there. Lots of misinformation from those that pretend to be a successful traders.
The truth is only those that are successful will be able to explain it to you.
I learned the hard way and I eroded my returns for over 5 years, by simply over trading.
There is a fundamental reason why over trading is bad for a trader.
I thought I knew what I needed to focus on to succeed. I was wrong.
What is Over Trading?
Over trading is trading outside of a systematic proven trading strategy & process.
When I was learning to trade in the Forex market, I kind of had system and strategy put together.
It’s much more solid and refined now.
Because I didn’t understand why a strategy really worked, I was trading too often.
I thought that is what you did as a trader, trade every day or as near as damn it.
That lesson would be a harsh one for me.
Five years later I was a break even trader! Not even making profit. I’d been losing for three or so before that.
I was happier but, for two years I was breaking even and frustrated.
Due to the frustration of breaking even I was trying to trade more to make returns.
I now know I was over trading.
Why is Over Trading Bad?
Over trading is bad because you interfere with the statistical winning edge you are attempting to obtain.
That winning edge can only be achieved by following a process which essentially is the trading strategy.
Every winning trading strategy has losing trades as part of the statistical winning edge.
When a trader takes losses they usually struggle to accept that.
That may force them to trade outside of their process that delivers the positive returns.
Pure price action is an incredibly misleading approach to trading Forex.
It is titled as simple and clean charts but the fact is the trader must exercise too much discretion.
As a result the trader will not have a robust enough process and will likely over trade and never make sustainable trading returns.
This over time erodes the process driven returns and winning edge.
A common issue I have seen in almost every trader I have worked with is impatience which leads to overtrading.
Seeking activity and entertainment. Through a lack of discipline sub standard trades are taken rather than waiting for the correct conditions t confirm.
Because of the lack of experience, the trader is still in the learning phase.
Because they do not realise that by interfering in the systematic process, the discretionary trades will likely erode returns.
This is exactly what happened to me.
So stop over trading if you want to see any improvement for starters.
What can you do to stop over trading?
You need a proven process and trading plan.
A plan & process means you know exactly what you need to do and follow it checklist style.
To stop me over trading I developed the Able Method
Three things that you must know as a trader.
- What you want to see.
- Where you want to see it.
- What you will do when you see it.
At Able Trading we have a trading mantra – Observe, Confirm, Act.
Because of this mantra along with the trading strategy the Able Method it means we follow a process that derives results.
Therefore we know when to trade and when not to trade and as a result we have a positive returns and that has helped members get funded and go full time.