Most traders simply want to trade. They fear missing out on the next big move and they forget that the market is still going to be there tomorrow and the next day and 10, 20, 50 years into the future. Everything in the market repeats and that means there will be another opportunity right around the corner, so stop worrying.
Today is not the last day you will have to trade and yet many people trade and think like it is! Over-trading is the number one reason that most traders dont succeed.
What would be considering “over-trading”？
If you find you are almost always in a trade, you‘re over-trading. If you find that you are preoccupied with the markets and your trades, you’re over-trading or youre about to over-trade.
There are many other examples of over-trading, but the basic fact of the matter is that you know if youre trading too much because you wont be able to sleep at night and you will be haemorrhaging money.
Consider this: Every 100 trades you give back at least 100 to 150 pips equivalent in spread or commissions, so the more you trade the more you cost yourself simply due to the “churn” of your account.
Doing too much of anything is usually a bad idea
If you take a look at most endeavours, trading included, often times doing them too much or thinking too much / worrying too much about XYZ endeavour has a direct and negative relationship to how well you do at that thing.
For example: Drinking too much coke, eating too much McDonalds, even working out too much or drinking too much water – all of these things can be bad for you. Being too worried about your significant other will end up pushing them away as it becomes unattractive and “needy”. One thing is true – too much of anything can hurt or even kill you and too many trades WILL kill your trading account for sure!
In Closing…
One of the hard truths of trading is that there simply are not a large amount of high-probability price events in the market each week, month or year. So, it goes to reason that the more you trade the less impactful your trading edge becomes. Despite these facts, most traders continuously trade far too frequently each week, and they end up losing money.
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