Overtrading: How to increase your profits by decreasing your trades
Are you still losing trades?
When it comes to trading, especially when you are just starting, there is the misconception that the more you trade, the more money you can make.
That is completely understandable given that this is what you’ve learned since childhood. Your mind may be conditioned to think that, and you can’t avoid making the same mistakes everyone else makes, no matter how many times you’re told in Forex trading, things are a bit different.
You may have heard this before, but repeating is never too much. In Forex trading, the less you trade the better. If you still think that opening and closing many positions in one day are the solution, I am really sorry to say you are falling prey to Overtrading.
It is important that you get out of this habit as in each trade you effectively borrow money in order to create leverage, and if you face too many losing positions, then cash flow won’t be coming into your account, it will be going out.
Could you be overtrading?
The first step to becoming a profitable trader is to identify your weaknesses and work on them. Recognizing that you are overtrading is the beginning of the cure. Defining it in a simple way, overtrading means trading too frequently.
If you study the best forex market traders in the world, you will find out that they have one particular skill in common: They are very patient!
They have experienced the market long enough to have learned that the best setups take time to materialise, and so they protect their working capital by waiting for the perfect moment to risk it. If their edge is not present, they just don’t enter any position. That’s it! It’s as simple as that!
How could you actually get to the same level as the best traders?
There are some steps which may help you avoid overtrading and get you on the right track. Let’s list them here:
- Trade only off the Daily timeframe
- Plan your week, and stick to the plan
- Have a Daily and Weekly limit
- Focus on the bigger picture
Trade only off the Daily timeframe
Professional traders trade supply and demand. The idea of trading smaller timeframes like 1 hour or 15 minutes will only harm your mindset and your account. Here at Platinum, we teach our students the concept of supply and demand and show them the importance of understanding that timeframes do not even exist. I understand many of you will not feel comfortable with this to start with but have you ever asked yourself why you are still losing after spending so long trying to master trading?
To put it simply, you are learning the same thing in different ways: Indicators, Oscillators, etc. The same old stuff.
Professionals will use the Daily, Weekly and even Monthly timeframes rather than the opposite. If you start doing that, you will not only trade less but also trade the market more efficiently.
Plan your week and stick to the plan
The best way to help you start trading less is to plan your week in advance. Here at Platinum we do our forex analysis on Sunday afternoons and follow the plan for the week using our forex trading strategies.
This will dramatically improve your trading. You will find it to be much less stressful as well. Sticking to the plan you created over the weekend is crucial for that to work in your favour. There is no point in planning and then finding yourself changing your key levels mid-week. We get many emails from our students concerned that some of our levels are too far when we draw our charts, and yet mid-week that trade triggers and is successful according to the plan. That initial reaction is totally understandable since they are keen to be taking trades as soon as the market opens, under the illusion that they may be losing out in the movements of the market.
Have a Daily and Weekly limit
This is a very good technique to stop you overtrading. Start your week with a plan to take 3-4 setups. Once you reach that, stop trading for the week. You can also have a limit of losses and gains. Say as an example if you lose 2 trades in a row, you stop for the week or even if you win 2 trades in a row as an example. Make sure you find what is comfortable for you, then stick to it.
If you do that, you will start finding yourself being more cautious in entering a position in the marketplace. You will be less likely to give back those all-important profit margins or look for reasons to enter a trade on Monday morning.
When you acquire that discipline, your world changes and better results start to be a reality.
Focus on the bigger picture
This is the normally the last realisation of a trader, yet the most important. Understanding that trading is a long-term business and that you will not have massive success after just a few weeks or months of first coming into contact with this craft is crucial to be successful.
Do not be concerned with how long it will take for you to trade full time, or trying to make 20-40% of your trading capital in a month. That will definitely force you to overtrade. Instead, focus on the process and have fun. Your trading needs to be as stress-less as possible. If you plan on living from trading, you have to start seeing is as a business, and focus on long-term targets.
Is there a way you could accelerate this process?
The correct answer to this question is that it varies from person to person, but yes, it is possible.
There are a few ways that The Platinum Team can help you solve the problem of Overtrading.
Each day we host a live session with one of our traders, they take the time to give you a professional and interactive review of the markets every day. Giving you a clear idea of what you can expect with the markets each day, allowing you more structure and consistency in your trades for the day.
This particular resource is available to our members, and it gives an in-depth fundamental analysis of the markets, accompanied by both technical charts, and key trading levels. This allows traders to know exactly where trade opportunities will appear, and even provide the opportunity to set up trades hours in advance to the levels being reached.
We have a number of trading mentors that can help you learn to trade forex, and discipline yourself into becoming a consistent profitable trader, making sure that you’re trading with patience, and enough analysis behind your entry points, stop losses and take profits. Our mentors provide this service on a strictly one-to-one basis, to ensure your concerns aren’t lost in a flood of questions from other prospective traders so you know you’re getting the best from them.
How to become a Profitable Trader:
If you are a new trader and would like to learn how to trade, then sign up today to our 2-day free Foundation to Forex Trading Course. Every month we receive a lot of inquiries on learning how to trade the financial markets. This is our way of answering those calls. You’ll get time to speak to a professional Forex Trader, who can show you just how easy it can be to trade the Financial Markets. Sign up today and we can get you on the path to becoming a successful Financial Trader.
Hopefully, you have enjoyed today’s article and have gained some great knowledge about how to trade.
See you soon!
The Platinum Formula:
Perfect Fundamentals + Perfect Technical Analysis + Perfect Logic + Perfect Risk Management = Perfect Trade
THE PLATINUM WAY
At Platinum, we teach all individuals from different walks of life to become a full-time profitable trader or create a secondary revenue stream by trading part-time. We trade in an Institutional Way by letting the market come to us and being patient. Using Platinum’s Trading system you can take many Pips out of the market. We can ensure using this style of trading your trading will make a turnaround as you will become much more consistent.
If you want to trade like the professionals do, making consistently profitable returns from your trading, get in touch with us and we will demonstrate live exactly how we approach the markets.
Download our free ebook to read about the various Trading Patterns that work in the Financial Market. Watch Trades of the Week Videos in our video gallery. Subscribe to Platinum’s Forex Newsletter.
Hopefully, you have enjoyed today’s article. Thanks for reading!
Have a fantastic day!
Nisha Patel
Live from the Platinum Trading Floor.