Overtrading: The Silent Account Killer

“Overtrading increases loss probability by up to 25% compared to disciplined execution”

We all know the market has its ups and downs. The trader waits for its system to appear on the chart and then takes entry and follows the plan. The market or mass psychology in the stock market doesn’t behave in normal ups and downs. The market moves sideways 70% of the time. Also, the majority of traders lose their money in a sideways market.

The problem here is not just about hitting the stop losses, but losing patience. I can vouch for it that most traders harm themselves in the sideways market because of the frustration of the market not moving in a decisive direction. To make money, a trader needs a trend, and in the absence of a trend, it is frustrating. Here, psychology plays a vital role.

It is novice to have entry and exit rules only. As a trader, we need to save our mind from the illusion of markets. We do not need to make money in every twist and turn. What is required is to end our day in green P&L with low charges.

In such a scenario, it is very hard to shut the computer and move away. The hope of making a profit and covering the losses doesn’t allow a trader to exit their position and come back again when the market shows a decisive move.

Here, the difference between the profitable and losing trader comes. A profitable trader accepts their losses and again waits for the market to make sense to him/her for a new entry. But for the losing trader, every signal is a chance to make money, which ends differently.

Higher losses affect the mentality of the trader, and then they tend to give more money to the market. It is very important not to let your emotions come into the trading and then lose more money. Capital needs to be preserved.

Controlling emotions during the market is not easy; therefore, you need to keep reminding yourself of the end goal — to make money and not to give money to the market. Constantly controlling your emotions in daily life can come in handy, as the market makes people humble who really want to make money. For all the people who are struggling with overtrading, I want to tell you that you are not alone. Making the simplest execution plans is indeed needed. Adding how to control your psychology during market hours also needs to be addressed in the trading setups and strategies.

To save capital, a filter is needed to stop making overtrades and focus on high-probability setups. Here is one such tip: