Guest post from visionsofaffluence.com
So you have been trading for a while now and you finally feel like you have gotten the hang of things. I mean you still take losses but now you know that they are an inevitable part of trading, and since you follow proper money management principles your wins always out weigh your losses. Since you are having so much success with your trading you decide to kick it up a notch. You figure that since you have finally turned the corner it would be ok for you to start trading more often and with larger lot sizes, because after all more trades = more money, and there is not such thing as too much money. So you start trading at times when you previously wouldn’t have and with lot sizes that before you would have said were to large for your account. Things go fine at first but then all of a sudden you can’t pick a winner to save your life and you account is hemorrhaging cash. You are lost, you have no idea what has happened or how to stop it. Everything was going fine and it seemed like you were on your way to being a great trader, and now it seems like you are right back where you started. What happened?
What happened is that you fell prey to one of the scourges of new traders, overtrading. Overtrading occurs when traders allow themselves to be guided by pressures to perform well rather than the markets themselves. The most common of the pressures is the quest to make more money. Traders get caught up in wanting to make more money and it clouds their judgment and causes them to force trades. They trade at times when they have no business being in the market, like during times of low volatility, they throw proper money management rules completely out of the window, or they start to completely ignore their trading plans in the search for profits. All of these mistakes eventually lead to their accounts being decimated and their confidence being shaken to its core, and without capital and confidence in their abilities a trader is nothing.
So if you want to be able to make it in this business then you are going to have to resist the urge to overtrade. We all want to be successful and make lots of money, but you have to realize that it’s not going to happen overnight and that you can’t force it. Remember, slow and steady wins the race and if you try to rush your success by overtrading, then the only race you’ll be winning is the 100 meter margin call dash.
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