That’s the last trade for today!
Is it, that sometimes you find yourself making a statement like this: “That’s the last trade for today!”?
If Yes, then you also know that often this won’t be the last trade.
We close our “last trade” for the day and after that it doesn’t last long until we see another big chance in the market. And without hesitation we jump into the next trade. But, WHY?
When I start trading everyday, I define the maximum risk for my daytrades and set a profit target. I don’t stop trading immediately when I reach my target, but I get very cautious in order to keep that money I’ve earned. With a defined risk and win management it shouldn’t be a problem to avoid overtrading, but it is.
No matter whether we earned or lost money trading. The market often drives us into new trades. Why?
Because our mind tells us that we should give it another try. And sometimes we make money by trading more often which doesn´t allow us to stop . Is this good trading behaviour? No, it isn’t!
The best method to make sure that you don’t hurt your riskmanagement is to visualize it.
- Always display your numbers. Write them down in an excel sheet or on a piece of paper. Often throughout the trading day visualize those numbers. That will give your mind the right signals and prevents you from self betraying. It just turns the information about your riskmanagement from a thought into a fact.
- It is possible to do this without writing it down. But this needs a lot of experience. So, as a beginner, always write down your riskmanagement and the win/loss ratio of your trades.
- If you daytrade you won’t necessarily need these numbers the next day. They are only useful on the day you trade. Preparing statistics afterwards only tell you what you did wrong days or weeks ago, but they won’t help you to prevent those failures, while you are about to do them.
I hope this helps a bit t to avoid Overtrading.
Have successful Trading day !
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