Common signs of Over Trading
When it comes to trading in share market
one of the most frequent mistakes is overtrading. Overtrading can take the
trader to big losses when the market is not clear enough.
There could be various definitions of over trading but generally the over trading is defined as Trading done by using big amount and doing multiple trades is called as Over trading
If trader is consistently losing money then following could be the one of the reason
1. The traders don’t have a complete trading strategy or not following it. The strategy includes knowing market direction, international updates, domestic (Indian) corporate updates, economic updates, capital utilization, when to trade and when not to trade and using stop losses.
2. Trader is overtrading. Trading is trading with more frequency than he supposed to trade and that too by using huge capital.
3. Trading is not taking advantage of the opportunities offered by the market but rather trading forcefully when opportunities are not present.
The following are four signs of over trading
1. Using all margin amount provided by broker.
2. Getting worried and tensed if the trade start going against you
3. Squaring off your trade in fear of loss
4. Getting impatient to do multiple trades to recover losses done in previous trades
One of the common characteristics of successful traders is that they are patient and wait for appropriate stock move to take a trade call rather than doing unwanted and false trading for sake for just trading.
Many hopeful traders don't reach professional levels and earn consistent money because they overtrade. They feel the more they trade, the more chances they will have to make money. This is incorrect.
The following are 3 ways to diagnose whether or not you are overtrading.
Here's what non-successful traders do and it is important that the trader has to make sure that they avoid it totally.
1. They're looking for action. Meaning instead of following a high probability trading methodology, they're taking trades on guess with no numerical limits.
2. They subscribe to multiple newsletters/TIPS (most without written, fully disclosed, track records) and they are at the same time watching the business channels looking for hot ideas. This type of traders gets success based only on luck and luck is not always good favor.
3. They trade for the rush. The more trades they do the better they feel. This is called as compulsive (uncontrollable) behavior and it's a serious weakness in any profession or activity.
If traders see doing any of the above then it is time to do paper trading and gain confidence and experience before start trading with money.
There could be various definitions of over trading but generally the over trading is defined as Trading done by using big amount and doing multiple trades is called as Over trading
If trader is consistently losing money then following could be the one of the reason
1. The traders don’t have a complete trading strategy or not following it. The strategy includes knowing market direction, international updates, domestic (Indian) corporate updates, economic updates, capital utilization, when to trade and when not to trade and using stop losses.
2. Trader is overtrading. Trading is trading with more frequency than he supposed to trade and that too by using huge capital.
3. Trading is not taking advantage of the opportunities offered by the market but rather trading forcefully when opportunities are not present.
The following are four signs of over trading
1. Using all margin amount provided by broker.
2. Getting worried and tensed if the trade start going against you
3. Squaring off your trade in fear of loss
4. Getting impatient to do multiple trades to recover losses done in previous trades
One of the common characteristics of successful traders is that they are patient and wait for appropriate stock move to take a trade call rather than doing unwanted and false trading for sake for just trading.
Many hopeful traders don't reach professional levels and earn consistent money because they overtrade. They feel the more they trade, the more chances they will have to make money. This is incorrect.
The following are 3 ways to diagnose whether or not you are overtrading.
Here's what non-successful traders do and it is important that the trader has to make sure that they avoid it totally.
1. They're looking for action. Meaning instead of following a high probability trading methodology, they're taking trades on guess with no numerical limits.
2. They subscribe to multiple newsletters/TIPS (most without written, fully disclosed, track records) and they are at the same time watching the business channels looking for hot ideas. This type of traders gets success based only on luck and luck is not always good favor.
3. They trade for the rush. The more trades they do the better they feel. This is called as compulsive (uncontrollable) behavior and it's a serious weakness in any profession or activity.
If traders see doing any of the above then it is time to do paper trading and gain confidence and experience before start trading with money.
1) Trader is overtrading when he is taking more trades than he supposed to take. Traders make this mistake when they feel overconfident or when they feel that they know market very well.
Or traders want to make a quick profit here and there or they are just following someone else’s advice and so on.
2) Sometimes traders tend to focus on the profit potential and don’t take in consideration the risk involved on a particular trade and this makes them to take more trades than they actual should while professional traders follow the trading plan prepared in the morning and stick to it.
3) If market is volatile and moving in very narrow range then some new comer feel like they are doing nothing, so they just take a trade to make them feel they are doing something instead of sitting ideal. So patience is required.
Important -Decision of staying out of the market for some time or for entire day is good trading decision to preserve the capital for tomorrow’s trading instead making forceful trade and accepting losses. Such type of wise trading decisions will add up with profits on monthly basis
Or traders want to make a quick profit here and there or they are just following someone else’s advice and so on.
2) Sometimes traders tend to focus on the profit potential and don’t take in consideration the risk involved on a particular trade and this makes them to take more trades than they actual should while professional traders follow the trading plan prepared in the morning and stick to it.
3) If market is volatile and moving in very narrow range then some new comer feel like they are doing nothing, so they just take a trade to make them feel they are doing something instead of sitting ideal. So patience is required.
Important -Decision of staying out of the market for some time or for entire day is good trading decision to preserve the capital for tomorrow’s trading instead making forceful trade and accepting losses. Such type of wise trading decisions will add up with profits on monthly basis
4) If traders have plan and not trading/following according to it then the first thing that comes up in the mind is that trader is afraid of losing. Trader need to remember that when the trading plan/strategy is prepared in the morning taking into consideration all updates then there are low risks for trading opportunities. Trader also need to remember that losses in the share market will be around forever, professional traders know this, they know it’s impossible to win all trades.
5) Don’t be afraid of losing if you have worked well on preparing the trading plan/strategy in the morning then your trades will be of low risk. To prepare good trading plan traders need market experience and they should spend months in the market to understand it. If the trading plan is prepared after spending months in the market then automatically the level of confidence comes to the trader for doing trading.
5) Don’t be afraid of losing if you have worked well on preparing the trading plan/strategy in the morning then your trades will be of low risk. To prepare good trading plan traders need market experience and they should spend months in the market to understand it. If the trading plan is prepared after spending months in the market then automatically the level of confidence comes to the trader for doing trading.
Trader need to feel comfortable and confident with his trading plan/strategy prepared in the morning and this way he will follow it with discipline and get consistent results
