Overtrading is one of the key reason for which the novice traders are blowing up their trading account. Though most of the traders learn the fact that overtrading is dangerous for their career still they trade more and more. They expect to make more money by taking random trades in the market. But by doing so, they are imposing a great risk to their career. To survive in the retail trading industry, you must learn to solve the problem of overtrading. Let’s find out some of the smart moves which you can follow to solve the problem of overtrading.
Write down your trading plan
Every trader should write down their trading plan. You may say that you have the plans written in your mind but this is not going to work. Unless you have the plan in the written format, you will keep on breaking the rules. If you take a look at the institution trader, you will notice all of them have strict sets of rules. They always abide by the rules since they know it is the most effective way to make money in the retail trading industry. So, to protect your trading capital, you must write down your trading plan.
Choose your broker carefully
Most of the low-end brokers encourage the problem of overtrading. They encourage their clients to trade more since it helps them to earn more money. They often conduct trading competition which induces the overtrading problem in the trader’s mind. To avoid such a problem, you may trade with the elite brokers like Saxo capital markets pte. By taking the trades with the brokers like Saxo, you should be able to enjoy a peaceful trading environment. Moreover, the overall trading process will greatly depend on the selection of your broker.
Trade with the key trend
You must learn to trade with the major trend and only then you can expect to make regular profit from this market. Think about the professional trader who carries their trade for a long time. All of them are following a simple trend trading rule. They never execute the trade without doing the proper market analysis. If you intend to make a consistent profit from this market, you must learn to deal with the major trend in a strategic way. Forget about the counter-trend trading strategy and develop a simple trend trading technique. Once you do that, you should be able to take the trades with a great level of confidence. And the profit that you will make from a single winner will cross the overall profit which you might make from few trades. Thus you will slowly stop overtrading the market.
Lower down the leverage
Due to the high leverage trading account, the traders can open multiple big trades. But if you intend to make a consistent profit from this market, you should lower down the leverage. By lowering the leverage, you should be able to execute high-quality trades and thus you will make regular profit from this market. Instead of making things complex try to develop a strategic method so that you can trade with fixed sets of rules. The maximum leverage which you should use in your trading account should not exceed 1:100. It is better to trade with a leverage of 1:10. Instead of making things overly complex try to evaluate the market data strategically and look for the long-term goals. Once you do that you will stop taking the trades without doing the proper data analysis.
Trade with discipline
To solve overtrading, you must learn to trade with discipline. If you fail to trade with discipline, you will keep on making the same mistakes. And thus you will often become frustrated with your trading performance. No matter what you achieve from a certain trade, never break the rules. If you do so, the overall trading process will become much more complex and you will lose money most of the time.