6 reasons for overtrading in Forex
Unsystematic trading forces the traders to work harder and harder in the hope of making a profit. It gets to the point that they develop a real addiction to trading. Some traders start to trade too actively. Mostly it concerns short positions.
And the reason is simple – the trader has not identified a constructive trading method for himself. This means choosing a strategy, tools, having an individual style, experience, and other components.
How not to get addicted :
- Learn to identify overtrading.
- Understand the current situation and analyze whether it is possible to work this way long enough.
- Identify the rationale for your method and use it in similar situations. This way, you will avoid unnecessary self-activity.
- Create your basic criterion for normal trading activity so that there is something to start from. This way, you can track how far the deviation from the norm has gone.
- Take the number of completed trades or the volume of trade as a basis. But here, natural deviations are allowed. For example, the general market activity will increase with high fluctuations when everyone tries to open as many trades as possible.
1. Strong passion
The state of excitement in Forex is observed among traders who put the pleasure of emotional excitement above the goal of making a profit. Such trading can be compared to emotional gambling in a casino, and, as a result, they quickly become addicted to it. Only instead of earning money you will be wasting it.
2. Fuzzy strategy
A formulated strategy is needed to determine the entry and exit points in the market, so its absence is compensated by any ill-considered actions during trading.
3. Routine
The market is characterized not only by exhilarating price surges, but sometimes there are rather long periods of calmness when fluctuations are either very insignificant or even completely absent. Spending a lot of time in front of the monitor, in such a situation, traders can get bored. Usually, people who have a strong preoccupation or those who are desperate for money suffer.
4. Lack of finance
The dire need for money is a severe obstacle to calm calculating trading. Because of it, any decision will be aimed at obtaining immediate profits, and the use of the strategy will be the last plan.
5. Enthusiasm
It is known that novice traders are always overflowing with enthusiasm. Those who enter new markets or are just starting to apply a new strategy are also guilty of this. This, of course, is a positive property, but everything should be in moderation. Excessive enthusiasm leads to the opening of more positions than required, and they are not always thoughtful and successful.
6. Impatience
People who do not have a reserve of patience quickly become addicted to trading. More trades are often made than are needed for truly profitable positions. This is because traders do not always adhere to the chosen strategies when opening extra positions. Thus, many transactions are unnecessary.
Less is better.
There are various reasons why even experienced traders will overtrade. Analyze each of them and find the most relevant deals for you. Examining the reasons for over-trading helps prevent a whole series of unnecessary steps, opening the way only to profitable positions.
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