Overtrading can be a very serious problem in the retail trading industry. If you have a look at the professional trader, you will notice most novice traders are losing money due to the problem of overtrading. So, to keep your fund safe in the stock market, you must learn to solve the problem of overtrading. Though novice traders often think they will not overtrade the market and follow strict sets of rules in the trading profession, it doesn’t work like this.
In this article, we are going to give you some amazing tips which will help you to solve the problem of overtrading. Once you go through this article, you should be able to make a regular profit without having any big problem. Let’s learn more about the problem of overtrading.
Trade the higher time frame
The rookie traders love to trade the lower time frame and thus they develop the habit of overtrading. If you intend to keep your fund safe, you must learn to trade the higher time frame. Higher time frame trading is more profitable, and it offers better trading opportunities. In fact, with the halo of the higher time frame trading method, you should be able to manage the risk profile in the standard way. On the contrary, if you trade in the lower time frame, you start ignoring the quality of the trade signals. Thus, you will take random trades and lose money most of the time. So, to protect your trading capital, you must follow the core rules of the article and trade the market with strict sets of rules.
Trade with the trend
The smart traders at Saxo Bank never trade against the trend. They know trend trading strategy is the only effective way by which they can make regular profit. If you want to make your life better, you must learn to trade with the trend. Once you learn this technique, you will stop looking for frequent trades and thus it will make things much easier. So, how do we find the existing trend in the market? To find the existing trend in the market, we need to rely on high-end tools. Try to analyze the market data with a robust platform so that you don’t have to deal with any technical glitch.
Limit your trades
Most of the traders don’t trade with fixed sets of rules and thus they overtrade. To solve overtrading, you need to limit your trade. If you do that, you should be able to make a regular profit from this market without having any major trouble. For instance, you should not open more than 3 trades per day. If you do so, you will see the stress associated with the trading business is greatly reduced and you will be able to make more profit with low risk.
Some of you might think you can keep on trading once you have lost the first two trades. But this is not how the limit factor works. You should not open more than 3 trades no matter what the result is. Follow this technique and you will become more confident with your actions.
Trade with low risk
One of the key reasons for which novice traders overtrade is the high-risk trading approach. You need to trade the market with low risk and then you will become more confident with your actions. Most people think they know everything about the market. But if you have a look at the professional trader, you will notice that they don’t know anything about the market. They are taking the trades with the insane leverage trading account and losing money most of the time. Lower down the leverage in your trading account and try to take the trade with strict sets of rules. Once you do that, you should feel more confident about your actions and thus you will make more money.