how to protect yourself from overtrading

obertrading

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RAAMAKANT

Well-Known Member
#2
Overtrading is a big problem among traders.
Overtrading can damage your account more quickly than almost anything else you can do. Part of the problem with overtrading is we don’t really know when we’re doing it – until it’s too late.
What is a trader to do? How can you stay away from the evils of overtrading?

To protect yourself from overtrading here are few simple things :-

* Always have a proper TRADING PLAN.
Simply put, people overtrade because they don’t have a proper trading plan. A proper trading plan is more than just preplanning your entries and exits. A proper trading plan also tells you when you’ve traded enough and it’s time to stop. With a trading plan it is virtually impossible to overtrade.
Developing a proper trading plan is not difficult to do; however most traders don't even know it's importance.

* Keep in mind, " LESS IS More…"
If you really want to stop over-trading you are going to have to realize that less is more in Trading. Unfortunately, many traders come into the market with the opposite attitude; more is better. Newbees/ fresh traders tend to think that more trading is better, more indicators are better, more analysis is better, more hours in front of the computer is better, etc. However, this is definitely NOT the case and you need to understand this if you want to stop over-trading…
Spending too much time in front of your charts induces over-trading because you will over-analyze the nearly limitless amount of market-related variables out there and end up “manifesting” signals that aren’t actually there.

* You can control yourself, not the market…
Simply put; over-traders are trying to control the market…
You need to honestly stop and ask yourself if you think you feel like you are trying to control the market. Once you realize and fully ACCEPT that you really have NO control over the market, you will begin to think differently because you will realize you have to master a trading edge, and then you have to only trade when the market shows you your edge.

* An Escape Plan
As with all things trading related, nothing works 100% of the time. There will be days when the market just seems to don't want to give you a winning trade to save your life. On days like this you need an escape plan to protect your account.
An escape plan can take several forms but it is important that you have one. The simplest escape plan is to set a loss limit, or maximum drawdown for the day or set maximum numbers of the trades for the day and is the easiest way to keep from “blowing up” your account.
I have a strategy which produces high quality signals, so if I get a losing trade off a quality signal then I know that something is not right with the markets. Therefore I have a “three good signal loser” limit: if I get three losing trades off good signals, then I know that the markets are not behaving as they should and I stop trading the rest of the session.


Almost everyone is profitable at one time or another. The difference between the traders who make money and the ones that don’t is the traders who make money know when it’s time to quit.
Eliminating overtrading is all about having a plan to keep your emotions in check. The markets will always be unpredictable, but by knowing in advance how you are going to deal with the markets puts you one step ahead of the majority of traders who continue to on trade their emotions and jeopardize their accounts in the process.


Happy Trading.....:thumb:
 

sangram1705

Well-Known Member
#4
Overtrading is a big problem among traders.
Overtrading can damage your account more quickly than almost anything else you can do. Part of the problem with overtrading is we don’t really know when we’re doing it – until it’s too late.
What is a trader to do? How can you stay away from the evils of overtrading?

To protect yourself from overtrading here are few simple things :-

* Always have a proper TRADING PLAN.
Simply put, people overtrade because they don’t have a proper trading plan. A proper trading plan is more than just preplanning your entries and exits. A proper trading plan also tells you when you’ve traded enough and it’s time to stop. With a trading plan it is virtually impossible to overtrade.
Developing a proper trading plan is not difficult to do; however most traders don't even know it's importance.

* Keep in mind, " LESS IS More…"
If you really want to stop over-trading you are going to have to realize that less is more in Trading. Unfortunately, many traders come into the market with the opposite attitude; more is better. Newbees/ fresh traders tend to think that more trading is better, more indicators are better, more analysis is better, more hours in front of the computer is better, etc. However, this is definitely NOT the case and you need to understand this if you want to stop over-trading…
Spending too much time in front of your charts induces over-trading because you will over-analyze the nearly limitless amount of market-related variables out there and end up “manifesting” signals that aren’t actually there.

* You can control yourself, not the market…
Simply put; over-traders are trying to control the market…
You need to honestly stop and ask yourself if you think you feel like you are trying to control the market. Once you realize and fully ACCEPT that you really have NO control over the market, you will begin to think differently because you will realize you have to master a trading edge, and then you have to only trade when the market shows you your edge.

* An Escape Plan
As with all things trading related, nothing works 100% of the time. There will be days when the market just seems to don't want to give you a winning trade to save your life. On days like this you need an escape plan to protect your account.
An escape plan can take several forms but it is important that you have one. The simplest escape plan is to set a loss limit, or maximum drawdown for the day or set maximum numbers of the trades for the day and is the easiest way to keep from “blowing up” your account.
I have a strategy which produces high quality signals, so if I get a losing trade off a quality signal then I know that something is not right with the markets. Therefore I have a “three good signal loser” limit: if I get three losing trades off good signals, then I know that the markets are not behaving as they should and I stop trading the rest of the session.


Almost everyone is profitable at one time or another. The difference between the traders who make money and the ones that don’t is the traders who make money know when it’s time to quit.
Eliminating overtrading is all about having a plan to keep your emotions in check. The markets will always be unpredictable, but by knowing in advance how you are going to deal with the markets puts you one step ahead of the majority of traders who continue to on trade their emotions and jeopardize their accounts in the process.


Happy Trading.....:thumb:
thanks ramakantji for your reply.
 

lemondew

Well-Known Member
#6
My small experience.
1) Try to find high probability winning strategies.
2) Backtest- calculate how many trades your strategy generates in a weak/month. How many wins it has and how many losses.

eg: my strategy generates 4 trades a week. It has a winning of 75%. Basically now you will be taking only 4 trade a week or 1 trade a day. The rest of the time I wont be trading. Plan your day to expect to be trading once day for 20 min 30 mins whatever. You know at the back of mind that you would be working if at all for only 20 mins a day.

3) Try to find other things to do when you dont get a trade signal. For trading - Reading investment books, analysing your strategies, device better strategies, finetuning it. Non trading related listening music, playing games or taking any other hobby. I realised earlier when I tried intraday I used to trade because of being bored nothing is happening in market.
Frnds pl guide me with your experience
 

TradeOptions

Well-Known Member
#7
Overtrading is a big problem among traders.
Overtrading can damage your account more quickly than almost anything else you can do. Part of the problem with overtrading is we don’t really know when we’re doing it – until it’s too late.
What is a trader to do? How can you stay away from the evils of overtrading?

To protect yourself from overtrading here are few simple things :-

* Always have a proper TRADING PLAN.
Simply put, people overtrade because they don’t have a proper trading plan. A proper trading plan is more than just preplanning your entries and exits. A proper trading plan also tells you when you’ve traded enough and it’s time to stop. With a trading plan it is virtually impossible to overtrade.
Developing a proper trading plan is not difficult to do; however most traders don't even know it's importance.

* Keep in mind, " LESS IS More…"
If you really want to stop over-trading you are going to have to realize that less is more in Trading. Unfortunately, many traders come into the market with the opposite attitude; more is better. Newbees/ fresh traders tend to think that more trading is better, more indicators are better, more analysis is better, more hours in front of the computer is better, etc. However, this is definitely NOT the case and you need to understand this if you want to stop over-trading…
Spending too much time in front of your charts induces over-trading because you will over-analyze the nearly limitless amount of market-related variables out there and end up “manifesting” signals that aren’t actually there.

* You can control yourself, not the market…
Simply put; over-traders are trying to control the market…
You need to honestly stop and ask yourself if you think you feel like you are trying to control the market. Once you realize and fully ACCEPT that you really have NO control over the market, you will begin to think differently because you will realize you have to master a trading edge, and then you have to only trade when the market shows you your edge.

* An Escape Plan
As with all things trading related, nothing works 100% of the time. There will be days when the market just seems to don't want to give you a winning trade to save your life. On days like this you need an escape plan to protect your account.
An escape plan can take several forms but it is important that you have one. The simplest escape plan is to set a loss limit, or maximum drawdown for the day or set maximum numbers of the trades for the day and is the easiest way to keep from “blowing up” your account.
I have a strategy which produces high quality signals, so if I get a losing trade off a quality signal then I know that something is not right with the markets. Therefore I have a “three good signal loser” limit: if I get three losing trades off good signals, then I know that the markets are not behaving as they should and I stop trading the rest of the session.


Almost everyone is profitable at one time or another. The difference between the traders who make money and the ones that don’t is the traders who make money know when it’s time to quit.
Eliminating overtrading is all about having a plan to keep your emotions in check. The markets will always be unpredictable, but by knowing in advance how you are going to deal with the markets puts you one step ahead of the majority of traders who continue to on trade their emotions and jeopardize their accounts in the process.


Happy Trading.....:thumb:
RAAMAKANT bro, thank you so much. Excellent Points. :thumb:
 
#9
Avoid discount brokers who have unlimited plans. It will make you go nuts and burn your capital. I speak from experience. The thing is that these brokers don't even have any research or perspectives on the market and just expect you to give them money for free. After that, they don't care about you. Another way, is to choose a percentage broker. Yo will be conscious about turnover.
 
#10
hi,
After a big loss, take a break. The reason you want to take a break is you unknowingly will conjure up the need to make the money back. You are the master of your destiny and your trading results are only a mere reflection of your relationship with money.
Trade a Set Number of Stocks per Day. Set Profit and Loss Limits for the Day. If you are able to limit your losses and also set a profit target for the day where you say to yourself, that's enough, then over time you will accumulate a nice war chest!
Limit the Number of Setups you Trade. The excessive trading kicks in because you are looking at filters and you see the lights flashing and without a solid trading plan for why you enter a position, the market will hold you within her grip.
Limit How Long You Look At Filters. It allows you to really focus your trade opportunities based on what the market is doing in real-time. So, instead of realizing it's okay to stay on the sidelines, you will end up taking the plunge because of the pretty flashy lights on your screen.
Do not Trade All Day. Trading is not like a 9 to 5 job. Placing trades all day does not mean that you are going to make more money. Trading is one of those things in life that you need to work hard at offline, but not necessarily in the market.
Execute Your Trading Plan. If you don't currently operate based on a trading plan, please take the time to write one down and start using it today.
Over trading can be one of the many things holding you back from achieving significant trading results. You have to be honest with yourself and at all costs fight your impulsive side that wants to dictate terms to the market. If there isn't a trade opportunity present, it's okay to just observe. Sometimes sitting in cash is not only the best move, but the only move. Good luck
 

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