Overtrading is one of the prime reasons for losing money in the Forex market. The novice investors are always trying to trade more since they think it is the only way by which they can change their life. But if you trade more, you are exposing yourself to high risk. There is no assurance that you will earn more money. You will be losing more money since you will focus on low-quality trade executions.
Trading more than 3 trades per day is often termed overtrading. Sadly the novice traders take multiple trades just to earn more. Eventually, they blow up the trading account within a short time. In this article, we will give you three power tips that will help you to solve the problem of overtrading. Without any delay, let’s jump into the details.
Limit your trade
The first thing which you need to do is limit your trade. You should not trade more than 3 trades per day. You might be thinking that taking 3 trades is very little. Think about the professional traders who are making thousands of dollars profit in the retail trading industry. All of them are trading few trades per day since they know it will solve the problem of over-trading. At times, you might win the first three trades. So, you might think that there is nothing wrong to open more three trades. But this is completely wrong. Once you have win three trades, there is a need to open another trade.
If you trade more than 3 trades per day, chances are high you will mess things up. You will slowly become emotional and take aggressive steps. Thus you will fail to manage the risk profile in a standard way. So, to protect your trading capital, you must learn to control your emotions. Once you learn this technique, you should be able to overcome the problem of overtrading.
Trade with a big account
The size of the trading account plays an important role in your success. Most traders lose money since they don’t have any knowledge to manage the risk factors. They keep increasing the risk factor and try to earn more money in Forex trading profession. But if you trade with a big account, you won’t have to risk more to earn more money. You don’t need to trade more to support your family. If you manage to win one good trade, you should be able to fulfill your daily requirements. But do not think that winning one good trade is an easy task. It takes years of practice and hard work to improve your skills.
Instead of starting to trade the market with a small trading account, you should learn to trade the market with the big capital. So, try to gather some money which you can afford to lose. Unless you trade with big capital, you will never realize its power.
Educate yourself properly
Most novice traders overtrade since they don’t have strong knowledge about the market. They keep on taking random trades and expect to make more money. But this not how the Forex trading industry works. You need to educate yourself properly and learn about technical and fundamental analysis. Once you master this technique, you should be able to manage the trades in a much better way. As you keep on learning about the market, you will realize the consequence of overtrading. Soon, you will start trading the market in a very organized way.
At times the novice traders often make things difficult by using too complex a trading method. You don’t have to rely on a complex trading strategy to earn your living. Develop a simple trading strategy and try to take the trades at the important support and resistance level. And keep the risk factor low so that you can deal with the losing trades without having any stress.