5 Simple Strategies to Conquer Overtrading


Overtrading is one of the biggest account killers new traders fall prone to. It even plagues experienced traders.

You have to know when to stop, shut off the screens, and walk away. Our minds want to keep gaining and seeking out stimulation from the markets as long as they are open, but as any veteran trader will tell you, the longer you are at the screens placing trades, the lower your probability of success will be over time.

As a trader, you have to be calculated with your decisions and trades, and only trade when the time is right. You may want to trade the afternoon chop and try to make a quick buck, or may want to scrap your losses back from the open. Whatever the case may be, these tips below will help you avoid midday chop, avoid over-trading, and leave the desk every day with a clear mind.

Set a Routine For Yourself

Having a set daily routine like the one in the picture below is the big step to conquering over-trading. If you have a set routine and schedule, your mind will adapt to those habits and timelines and will automatically stop hunting for signals and trades that aren’t there past the morning session.

It will go into ‘break mode’ midday, and help you avoid the midday chop. Set a routine for yourself with strict timeframes and activities, and you will see that structure in your day will translate into more consistency and less over-trading.

Take a Trading Break

Recognize when emotions are getting heated. Often it’s after a trading loss when new traders get emotional. This is when traders make the worse decisions. They start to revenge trade to make it back, force trades, and end up overtrading as they trade everything that moves to get their money back. A simple 5-10 minute break will allow you clear your head, start looking at the markets objectively again and prevent this death spiral.

Have a Set Profit/Loss Parameters

Every day you should have profit and loss parameters in mind. If you make X on the day, or lose X on the day, you sell all or a majority of your positions, and move on with your day. If you hit it in the early morning, walk away from the screens happily knowing you did your job either way. If you lost, no problem, you managed risk. If you won, great! Move along. Knowing when to not trade is just as important as the trades you do take.

Limit Your Trades Per Stock

Limiting the number of times you trade one stock in a day will help you avoid the spin cycle. The spin cycle is when you trade one ticker over and over again. The more times you trade one stock, the worse your chances of making money on it. We call this “battling a stock.” When a trader keeps trading a stock just so he can get a win on it. It becomes a trade based on ego instead of logic. 

It is just the reality of the game of probability we play in. Limit yourself to trading MAX one stock 2 or 3 times per day. If you lost on it multiple ties, it means the setup is not clean or your forcing your entries. 

Set a Timer: Avoid the Afternoon

This goes hand-in-hand with setting a routine for yourself. Set a timer where at that time it tells you to completely walk away from the screens at a certain point, or to stop looking for new opportunities. Usually, we recommend this to be anywhere from 11am until noon, right as the lull of the day hits and the volatility dries up.

Now, it is one thing to know how to avoid trading during certain times, but how do you know what setups to take when the time is right? How can you train yourself to pull the trigger on the right trades day in and day out?

That is where our boot camp comes in. Just take it from Islam here, one of our newest students who has been finding consistency in his trading results recently. He now knows exactly when to pull the trigger and why at certain times of the day, and can spot what to avoid from a mile away.

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