Overtrading is one of the challenges a new trader faces. It is about not when to trade, but rather when not to trade. Trading the forex market is not about pushing to the limits, it is about placing yourself in the position which is as comfortable as possible and will help you to get to your goal. One thing that all traders will eventually need to consider is how much should be traded. Each style is different, and too many or too few trades could potentially harm a trader’s profits.
Overtrading is the most frequent mistake that most traders make maybe because they are so eager to make big money or because they are not sure of its complications. There are underlying causes of over trading although it depends on every individual. The underlying causes could be a sense of insecurity thereby looking for ways of making money very fast, the false idea that trading in forex markets brings about big returns within a short while, and unhealthy competitions among friends who want to try to beat each other.
When you are entering and exiting the market a large number of times, the tendency is that you then take lower quality setups. It is a sign of impatience and means that you have failed to stick to your trading plan as you were meant to trade it. Trades so often make the excuse that they thought it was a quality setup at the time, but this is just a symptom of poor planning.
You have to know your trading strategy inside out to be able to seamlessly execute only the highest quality forex trading setups.
Overtrading in forex trading has been known to be both an emotional and psychological problem. Most traders who over trade do it in frustration, after going through many losses that they could not manage. So out of frustration they tend to trade more and more without looking at the rules of trade in a bid to catch up on lost time and money. At times, those who over trade are people who feel overconfident with themselves after realizing consistent profits so they start to over trade in a bid to make more only to lose in the end and break down.
When it comes to successful forex trading, the best traders truly do keep it simple stupid. When it comes to trying to preventing over trading, you need to shift your workload to focus on the planning rather than the trading itself. If you have done the work beforehand then you don’t need to be sitting in front of your charts 24 hours a day and analyzing every single tick up or down on the 1 minute MT4 chart. Keep it simple by entering a clearly planned trade and then stepping away instead of micromanaging your position.