A  quick reminder about the danger of overtrading

It is the easiest trap to fall into. You take a long there, a short here. Close out the position early as you have changed your mind. You then enter back in again after changing your mind. You have fallen into the trap of overtrading. Even if you have control over your leverage levels you risk dieting a ‘death by a thousand small cuts’.

There are many reasons for overtrading and these include, but are not limited to, the following. You are a new trader and have no real clear understanding of why you are or are not trading. You could have just had a big winning trade and you feel that you are trading with ‘the houses’ money. You may have had a large loss and are desperate to make these gains back quickly so you jump into the first trade you can think of. Or you could be over analysing markets and trying to enter every trade with every half reason.

How to solve it

This is tricky as the habit can go and come back at different times over your trading life/career. However, the first step is to realise you are overtrading. With this insight, you may be able to hold back and only wait for decent opportunities. If you still find yourself jumping into trades then stop trading. Perhaps you could not open your trading platform on your computer. Maybe you could take a break from trading for a few days. Either way, you need to break the ease with which you put on trades. Finally, if you still can’t stop overtrading take a prolonged holiday from the markets. Use the time to sharpen your analytical skills as overtrading can harm even the most skillful trader.