We return to the problem of overtrading. Today we will talk about 5 more reasons that force you to randomly open trades and lose your funds.
Reason 5. Boredom
In the foreign exchange market, periods of high volatility are followed by periods of calm. The price can fluctuate in a narrow range for quite a long time. Thrill seekers, as well as traders in dire need of money, begin to search for more suitable trading instruments.
In this way, they often turn to unfamiliar markets and try to apply their usual tactics there. However, a strategy that works well in the majors will not necessarily work in exotic currency pairs.
What to Do
We must be patient and wait out the period of calm in the market. If you start entering trades in the new markets randomly, you might lose all of your investment.
If you prefer to have a more volatile market in reserve, choose one and study it thoroughly:
- What strategies work for this pair
- What type of analysis is required
- Find sources with the latest important news from the countries you need, etc.
When price goes flat in your main market, you can temporarily switch to a familiar instrument with high volatility.
Reason 6. Impatience
This point is a bit like the previous one. But here impatience manifests itself in a different way - a trader opens a huge number of trades with unconfirmed signals because he cannot wait for profit on already open positions. In pursuit of quick money, he begins to lose existing funds.
What to Do
Only self-discipline can help you. Make a checklist with the requirements for opening each trade and don’t enter the market if the order doesn’t correspond to at least 1 point.
Reason 7. Fatigue
When you get tired, you stop thinking clearly. You can make mistakes unconsciously. Individual trades may seem attractive to you and you enter them without basic verification and that leads to losses.
What to Do
The only correct solution is to take care of yourself:
- Take a break from trading
- Sleep more
- Eat right
- Unload your brain - meditate, walk, exercise, etc.
Return to trading when your brain is energized.
Reason 8. Excessive Enthusiasm
This feeling is common to many beginners. This applies to complete beginners and those trying out a new strategy, account type, or indicator. A trader wants to get a result as quickly as possible which leads to uncontrolled opening of trades.
What to Do
Enthusiasm is a great source of strength. Redirect it to another activity:
- Study the markets
- Read additional trading books
- Distract yourself with something else. For example, go in for sports.
Reason 9. Too Much Moderate Trading
This is not a reason for overtrading but rather a tip #9 for you - don't focus on extremes. It was said above that with low volatility, you should not rush into unexplored markets. However, it is also impossible to sit on the flat trend endlessly without the opportunity to earn money.
If the period of low volatility drags on, you can become lethargic and lose interest in trading. Find yourself an alternative instrument and focus on it. This way you will continue to make money and keep your interest in trading.