3 Simple Rules to Combat Overtrading

Overtrading will plague even the best traders.

During market conditions like these, it’s important to know when to walk away.

But how do you know when to do so?

Here are our 3 simple rules to figuring that out…

1. Set a hard limit

There is a certain number of trades you can take before fatigue kicks in.

For some it’s 3, others it’s 10.

To figure out your number:

• Journal your trades to recognize patterns
• When do you stop caring what happens?
• When do emotions start taking over?

These are all great ways to determine a hard limit for your trading.

2. Stop after large streaks

If you’re on a large winning or losing streak, take a break.

These streaks will mess with your mind.

Your emotions will start to take over.

Step away from the charts for a few days to get back in the right mindset.

Money is a physical product tied directly to our survival responses. When survival responses are activated, you act purely on emotions.

So when you make or lose a large amount, your survival response will take over. Take a few days to regulate your nervous system and get back to a sound mindset.

3. Stop when you feel emotions

Emotions are great for relationships.

But they are terrible for trading.

A good way to know when you’re emotions are starting to get involved is when you start focusing on:

• Making back what you lost
• Focusing on a specific profit each month instead of quality trading
• Jumping in without a proper setup
• Getting back into a trade immediately after losing
• Averaging in because you’re convinced it’ll turn back around

Letting your emotions get involved will lead to you making bad decisions.

It happens to the best of us. Just call it quits and try again tomorrow.

Remember that this is a marathon, not a sprint. The harder you try to go, the more difficult it will be for you in the long run.

Just be patient, perfect your skills, and the profits will come.