Over-Trading - The Account Killer!
Published by Jay Davies in Trading Articles
With the Forex market open round the clock, 24 hours a day 5 days a week, and the lure of high returns on the table, this can sometimes prove to be too much of an enticement for people starting out.
One of the major reasons so many new traders fail is because they feel like they have to always be in a trade in order to make money, and that if they're not watching the market constantly then they will miss out on great trades. This couldn't be any further from the truth. In fact, over-trading leads to increased stress levels, poor decision making and blown trading accounts.
So what are the common signs of someone who over-trades?
- Constantly looking at charts and hunting trades for hours on end.
- Scrolling down to the unreliable lower time frames, such as the 5 and 15 minute charts, because they feel there are more opportunities to enter the market there.
- After a losing trade immediately making a "revenge" trade to try and recoup their money.
- Basing decisions on a gut feeling rather than a solid and proven strategy.
Sure, a new trader may get lucky a few times, increasing their account balance and boosting their confidence temporarily. This is extremely damaging behavior though, as it only nurtures and reinforces bad habits that will ultimately lead to the demise of their trading account. The market doesn't care who you are or how much money you have. If you over-trade then it will gladly take every last cent!
If you sincerely want to be a successful trader, then you need to develop a professional mindset. So what makes a professional trader so different from an amateur one? There are three things a professional always makes use of: patience, discipline and an effective trading strategy.
A professional trader is someone who is well educated in the market. They understand exactly how it moves and why it moves, and they've mastered a strategy that gives them an edge so that they can take advantage of these conditions. Possessing patience and discipline, they can sit on their hands for days at a time, until just the right signal presents itself. A professional trader also knows that less equals more when it comes to Forex trading, and that they're far better off sitting on the sidelines then losing money in a mediocre trade.
The first step toward becoming a successful currency trader is getting the correct education. We have worked hard to produce a trading course that equips people with the exact same knowledge that the professionals possess. If you enjoy trading but just haven't received the right education yet, then we would love to help you.