QA: I’ve got a question: Is it true that taking more trades and using more indicators on the charts leads to better profits? Or is this just another trading myth?

A. Unfortunately, that’s just another trading myth. Many new traders believe that more is better in trading. We all go through a phase of taking more trades and adding new indicators to our charts. But here’s the truth: more trades do not equal more profits.

The key is not to focus on quantity but on choosing quality positions based on a winning and proven trading strategy. Taking on too many trades can lead to overtrading, more losers, and increased stress levels for new traders.

Busting this trading myth part 1:

Here are some problems with taking too many trading positions:

Overtrading: This happens when you take on too many trades in a short period, leading to increased costs, fees, and commissions.

More Losers: Too many open positions can put your trading account at higher risk if they end up being losers. Instead of taking a few losses with a small risk percentage, you might end up with more losses and higher potential risk.

Stress Levels: Trading is stressful enough, especially for newcomers. Having many open trades can be overwhelming and affect your ability to sleep at night due to high exposure.
The trick is to wait for the highest probability trades, choose quality positions, and avoid rushing into too many trades.

Busting trading myth part 11:

Now, about the question of using more indicators on charts – it’s not a good idea. Having too many indicators can lead to analysis paralysis, where you plot numerous indicators and moving averages, thinking they’ll predict market movements accurately. However, complexity doesn’t guarantee success in trading.

Here are some issues with using too many indicators:

Difficulty in Testing: It becomes harder to track and analyze trades in a journal with numerous indicators.

Conflicting Indicators: Different indicators may conflict with each other, giving conflicting signals.

Complexity: Finding high probability trades becomes more challenging as you wait for all indicators to align.

In my 20 years of trading, I’ve learned to keep it simple. Focus on 2 to 3 indicators, master them, and ensure they work together. For example, I use Moving Averages, Price, and Breakout patterns. Follow a few money management rules and make trading simpler, more enjoyable, and less stressful. Learn how in my Red Hot Trader Community