Over-trading is perhaps the most prevalent trading mistake that Forex traders make. This article will fully explore over-trading and provide some solid tips to help you overcome this extremely destructive emotional trading problem. In fact, most traders who are not making money consistently in the markets are over-trading, whether they realize it or not.

For example, if you have committed to learning and mastering the daily charts first, do you still find yourself going and looking at the lower time frames more than you are looking at the daily charts? This is a very easy way to start over-trading. Traders who have not yet mastered price action trading on the daily charts are very likely to over-trade if they focus on the lower time frames instead.

This is because lower time frames tend to be riddled with lower-probability trade setups that often tempt traders to take positions that they would not have otherwise taken had they been focused on the daily charts.

Was the additional trade setup REALLY valid or did you jump the gun because you were feeling excited about your first profitable position? There are many other situations in addition to the two discussed above that constitute over-trading.

The main problem is that many traders are simply unaware that they are over-trading when they are in the moment.

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It is very easy to become fixated on a less-than-perfect trade setup and forget about your trading plan and not be consciously aware of whether or not you are over-trading. We can think of trading as a sort of war. The war basically boils down to your logical or objective b rain mechanisms vs.

The best way to win this war is to make a comprehensive f orex trading planand stick to it…passionately. I would bet money on the fact that if you are reading this right now, and you do not have a tangible and practical Forex trading plan, you are probably over-trading. It is absolu tely essential to create a Forex trading plan and foll ow it if you want to get on and stay on the right trading path.

All traders must do this in the beginning to develop the proper trading habits of logical and objective trading rather than emotional trading. In a recent article I discussed the importance of learning to trade like a sniper.

This concept is very important to overcoming your problem with over-trading. Not having mastered a proven and effective trading strategy like price action will also induce over-trading. I find that traders often over-trade in these types of consolidating markets because they lose patience or they simply do not know how to filter out the lower-probability trades in favor of the best price action trade setups.

At point one we can see two inside bars formed off support through 1. This setup was valid because the support level had already been tested recently on two previous occasions, and the setup thus provided us with an obvious inside bar strategy from a confluent level and a good risk reward scenario.

At point two we can see a bullish pin bar setup that formed off the 1. This setup was valid because we knew the level was significant, the pin bar was well-defined and obvious, and once again provided a good risk reward. Now, the difference here is that the risk reward scenario was very poor since you would have been shorting right into the previously established significant support level near 1.

A trader who is patient and skilled, and with a trading plan, very likely would have not traded this setup due to the fact that it required them to sell into a significant core support level.

At point four we can see another bullish pin bar setup that formed off the 1. At point five we can see two pin bars that formed. These two pin bars had proper form…but this is a good example of the fact that a price bar formation is not really a price action setup unless it has some factors of confluence behind it.

This was a setup that the skilled and patient price action trader very likely would have passed on. Another way many traders end up over-trading is by over-exposure to correlated Forex currency pairs.

For example, trading the EURUSD and the GBPUSD is essentially like taking two nearly identical positions since the pairs are very correlated and move in a similar manner. Even if there are two valid and high-quality setups in both pairs, you would not take both, you would use your discretionary price action trading skills to pick the better of the two setups and stick with that one. This point of over-trading by trading too many currency pairs at one time also brings up the point that over-trading is basically the same as over-leveraging your trading account.

Some traders get lulled into thinking by taking multiple positions they are diversifying or spreading their risk out, but in fact most of the time they are just adding risk by taking a larger position spread out among multiple pairs. You should view over-trading as two emotional trading errors in one; over-trading AND over-leveraging, because by over-trading you are also risking too much money.

If you really want to stop over-trading you are going to have to realize that less is more in forex. Unfortunately, many Fx traders come into the market with the opposite attitude; more is better. Aspiring traders tend to think that more trading is better, more indicators are better, more analysis is better, more hours in front of the computer is better, etc.

However, this is definitely NOT the case and you need to understand this if you want to stop over-trading…. Remember, over-analyzing leads to over-trading. Also, many traders try trading 15 different trading patterns or setups or who knows what else. My price action strategies are effective yet concise; my setups condense many redundant candlestick patterns into a handful of powerful price action strategies that are easy to learn and to trade.

If you look at any candlestick book you will soon realize many of the patterns are very similar and stop trading forex tends to confuse traders, I have eliminated this problem with the way I teach price action. Simply put; over-traders are trying to control the market…you need to honestly stop and ask yourself if you think you feel like you are trying to control the market.

Once you realize and fully ACCEPT that you really have NO control over the market, you will begin to think differently because you will realize you have to master a trading edge…and then you have to only trade when the market shows you your edge. To learn an effective trading edge, check out my price action Forex trading course. Learn to control yourself rather than the market…if you want to stop over-trading.

I must say that you have reduced burden from newbi to use so many indicators and signals on the charts. The idea behind it is very smart. Over-trading is a mistake a lot of traders commit. I use to tell people: I like the way you use a support and resistance model to illustrate your toughts. Sometimes it is almost crystal clear a currency pair is overbought or oversold, and this is a good timing to get a nice entry on a position.

Hey Nial,i hope u consider what u gat goin here as philantrophy,u are touchin lives Nial,good work. I love the way you handle this issue off over trading and is actaully the case. Thank you for help we the beginners to over Emotion and fear that cause over trading.

Brilliant article once again Nial, its a good reminder for me to be reading this as it helps me get on the road of consistency. Keep up the good work, tons of appreciation for you showing the path to good trading! Thanks for such a great article. I used to be a machine-gunner but since I came across your price action lesssons I am now a deadly sniper who is consistently profitable.

Keep up with the good work and thank you for being such a wonderful mentor. Nail, Great article, overtrading is so contagiuos, the australian ozforex never know you were in it, unless someone outside remind us.

Very good article as usual Nial,The chart examples shown were particulaly good,please show more in the future. Seems so simple and obvious, so why does each trade have such a massive emotional weight associated with it? Great tutorial forex trading india, and great explanation — it really help me understand the importance in confluence.

Thanks for the article. Hi Nial, You must see what I did last week. Overtrading and finding signals without confluence…. Your article is clearvery useful for me and immediately shows me how I can improve my trading. Your style of writing is educative, stock brokers in buffalo ny and I love it. Thanks again and keep writing.

Thank you for pulling me back to the ground. I wish I had gotten this reminder-article three days ago before I kept trying to get the reversal that never came and I over-traded myself by wanting to control the market on my own. Althought we constantly hear it and read it again and again, it is amazing how often we tend to forget the basic advices. Thanks Nial as always. The volatility in the market today is easy to trade and is a process of logic over emotion.

As you say I have no control over the market. So patience is key. The article is excellent as usual. The chart examples are superb. I hope future articles can include similar charts that show both good and poor setups with the explanations of the factors that make them good or poor.

I must say this was a timely reminder for me, especially on the over-exposure part. This is exactly like my wife tells me!! I have printed how much money can be made selling avon put in front of my desk. I ready every artical from you and learn something everyday.

Your notes many times just a good mentor for me. Keep writing good articals like this one!! Another superb lesson, and having engaged in a lot of what you have written about I am going to go back to basics and take the advice from this article. It really helps to know valid and invalid setups. After re-reading the notes a lot of timesstudying the videos, I suddenly understood the importance of confluence. My trading results changed immediately!

Thanks for drawing my attention to my current weekness Nial. Keep up the words of wisdon and knowledge. From a happy member. I have been learning the pateint part last few weeks. It is very hard not to trade because You havent put a trade on for a week. That is a bad way to trade. I must say the Forum on LTTTM keeps me on track, Timely article Nial Thanks again Filopastry.

Great article NialI like the chart example you showed to show how are professional trader would view the market. Keep up the good work. Your email address will not be published. Notify me of follow-up comments by email. Notify me of new posts by email. Any Advice or information on this website is General Advice Only - It does not take into account your personal circumstances, please do not trade or invest based solely on this information.

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