How do you know you are overtrading?

Almost every trader will go through the overtrading stage at some point of time in his/her trading journey. So, what is overtrading? In short, overtrading is the act of trading too frequently. The problem is most traders fall into this trap and did not even realize it until losing too much money.

By having more trades in a day or week does not fully define overtrading because it could be a system generating the signal for entry. Instead, if you feel yourself fall into any of the categories below most likely you are overtrading.

  1. Finding a trade instead of waiting for a trade.

If you look at the chart and do not have a clear signal, then you switch to another indicator until you find a reason to enter the market then you fall into this category. Trading requires a high degree of patience and discipline; therefore, professional traders wait for a trade to happen instead of looking for a trade.

  1. Feeling the urge to place a trade

If your trading account always has an open position or you will enter a trade after just close off a trade without following any trading rule, then most likely you currently having the urge to placing a trade. The urge to trade can be due to greedy when you close a profitable trade and thinking to make money is easy or fear and anger after losing a trade.

  1. Addiction

To some people, trading is like gambling. You view trading as an entertainment or gambling place. Your trading decision based on a bounding pulse, a rush of adrenaline and excitement. You often get excited when the market makes big movement and feeling to participate when the market move.

The overtrading most like due to without having a defined trading system and psychology. The above we have listed down the sign of overtrading in our next article perhaps we can list down the ways to overcome it.