Being a trader, you must know the right strategy to avoid over trading. Starting trading is easy, surviving in the trading world is just challenging.
Beginner traders are often faced with various problems, ranging from lack of capital, less than optimal risk management, trading with emotions, to overtrading.
There are so many scenarios that can be referred to as overtrading - opening too many positions, using too much capital, trading too much in a short period of time, trading outside the limits of risk, and so on.
In essence, overtrading is trading without a good strategy and management so that the trading business that is carried out tends to be like gambling.
Feeling overconfident after one win, trading without a plan and inconsistency, tend to talk about opening and closing positions, desperate to open positions even after losing several times - all of these are the characteristics of overtrading.
Simple Tips to Avoid Over Trading You Can Follow
Of course, if it is not addressed, traders can lose a lot of funds and cannot trade long-term. Therefore, it's a good idea to follow some easy tips below to avoid over trading:
1. Create a weekly trading plan
The end of the week is the perfect time to take a break from the markets and plan to trade for the next week as the forex market closes. Review your trading results over the past week to see what strategy was right and what wasn't right.
You can also learn trading strategies and tips at Didimax forex broker. Also, understand the latest financial conditions and your trading capital to determine risk limits and profit targets for the next week.
Also, read the fundamental news released over the weekend and identify the impact of this news on price movements. That way, you already have the stock of trading analysis for Monday so you can make wise trading decisions without being affected by emotions.
2. Perform disciplined risk management
No matter how good a trading plan is, it will not be useful without being followed by discipline in managing loss risks. Make sure all transactions that are still open have a stop loss limit according to the amount of loss you can accept.
Also, pay attention to the amount of equity or funds you have and determine the maximum number of lots that you can trade next. This is so that you do not carelessly open as many positions as possible in the next transactions.
3. Avoid looking at charts continuously
Too often looking at charts or charts can cause stress and emotional instability. When the price moves up, immediately rush to buy without paying attention to the trend and fundamental news.
Vice versa. Of course, this can cause a lot of losses and lead to overtrading. So, pay attention to the chart as necessary to avoid over trading, only when making an analysis and when actively trading on the market.
4. Focus on long-term goals
Even if you make a weekly trading plan, don't be too ambitious to get big profits every week. Trading is a profitable business in the long run.
So, don't look for ways to profit tens of percent in the first month, because this mindset will actually trap you into an overtrading hole.
Instead, make a profit target little by little but consistently every week and month, while continuing to sharpen your trading strategy and analysis with the best forex broker. That way, you will be able to enjoy the fruits of your hard work as a trader within a few years.
Overtrading bondage is closely related to emotional management. Learn how to control emotions in forex trading, and continue to train yourself to make wise trading decisions based on analysis and data to avoid over trading.
