Forex and Commodities Trading – How to Abstain Overtrading

Overtrading is a ‘must avoid’ trading practice, yet it is practiced by a high percentage of traders trading stocks, currency pairs, futures and so on. It is not that much a hard-to-overcome habit; one just needs a sound plan and dedicated implementation. Here are some tips to avoid overtrading:

Create a trading plan and stick to it. The plan should address what to trade, when to trade and how to trade.
Create a small list. Rather than trading each and everything, create a small list of fundamentally/technically evaluated stocks and search for opportunities. Keep the list short, and periodically update the list.
Do some research. Before entering a trade, make sure there is a chance of profitability. Use the most convenient tools/indicators to evaluate each opportunity. In short, never go blind.
Don’t make your money flow too complex. Keep your risk to low levels, ideally below 2% of your capital, and limit the number of your open positions.
Be patient and consistent. No market can make you rich overnight and no single trade can make you a successful trader. The rule of thumb is ‘the predator should be more patient than the prey’.
Evaluate regularly. Ideally at the end of the day evaluate your trades and decisions. Evaluate how well you implemented the plan or answer why you deviated from the plan
Set up stop and limited order. stop order will help you stop bigger lost while limited order take profit for you and keep winning result apart from greedy.

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Tags: Abstain, Commodities, Forex, Overtrading, Trading