The Constant Danger of Over-Trading

Filed under: Learn Forex Trading |

As a forex trader, there is always a constant and ever-present danger of over-trading, even with the best of us. I had one such occurrence yesterday. I have been on a really good run recently, with around a 75% strike rate. I was beginning to feel that every trade I touched turned to gold. This is an emotion that we need to be really wary of. As I had made such good profits recently, I felt that I could take a bit of a gamble on a trade setup that wasn’t completely there. Sure, it was a nice pin bar, but the level of support/resistance it was at was not very strong, and I ignored a contrary signal on the daily chart and recklessly pushed a button. Of course, the trade did not come off and I had to take a loss and review the situation. I concluded that it was probably a case of overtrading, and I would likely not have taken this trade had it been the first one of the month (end of month trading can always be a little tricky for me, as I judge myself on the results at the end of each month).


So what can you do to curb the ever-present dangers of over-trading? First, try to be more aware of your emotions and thought processes; and listen to them. There was a little voice in the back of my mind that I ignored on the aforementioned trade. Had I listened to it, I would be 100 GBP better off! Another thing is to try to be consistent in your methodology and the way that you trade. I deviated a little and did not have enough confluence with the trade – and as such, I paid the price.


Over trading can have a devastating effect on your trading bank, so make sure you are not taking too many trades – just for the sake of being in the market. Sometimes, the best trade is to sit and watch.

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