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Don't let overtrading be your downfall… Here are three ways to resist the temptation

by , 05 May 2015

Overtrading is the ruin of many traders.

What tends to happen is after having a run of winning trades, you keep putting on new trades with no real plan of action.

Your winning streak comes to an end and you start losing money. You struggle to make any winning trades and you continue to lose money.

This train of events can lead many traders to stop trading.

So how can you avoid overtrading?

Read on to find out…

Prevent overtrading tip #1: Keep a trading log

The first step to prevent you from overtrading is to keep a trading log. Simply record every trade you put on.

In your trading log, write down:

  • What trade you’re entering;
  • The time of your trade;
  • The charts you’re using;
  • The signals you’re acting on; and
  • The outcome of the trade.

From looking at your log you’ll be able to see where you make money and where you lose money. You can then tweak your strategy around this.

Make sure you review your log weekly or monthly, Max Munroe in Forex Round-Up explains.

Prevent overtrading tip #2: When to place a trade

You should only put a trade on when your trading strategy tells you to. You want everything lined up exactly according to your system.

Don’t be too eager to put on new trades. Be patient.

Discipline is key to profitable trading.

Prevent overtrading tip #3: Don’t try to time the market

If you try to pick the tops and bottoms of the market, stop right now. This is very difficult to do. Chances are you’ll fail and waste money along the way.

Trade with the current trend. Don’t forget the old stock market adage the trend is your friend.

So there you have it. Three ways to resist the temptation of overtrading.

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Don't let overtrading be your downfall… Here are three ways to resist the temptation
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