Many people think overtrading the market will yield more profit. If we think of overtrading logically, there is no reason why you should not get profit. The price levels of the currency pairs are moving up and down .when you are more trades, chances are very high to earn more money. The people think of this common logic and they overtrade the market. The result is they lose their money. This article is going to tell you why overtrading is not a successful strategy to follow. People are investing their money and they do not want to lose the money with the trades they make in Forex. Overtrading may look amazing to you when you know you are going to have more profits but traders do not have the profit when they overtrade. This answer is not known to all and this article will tell you why overtrading does not result in profit.
Professional trader’s attitude
The expert traders in the United Kingdom often say that overtrading is the most dangerous enemy of novice traders. They always suggest the novice traders place quality trades. If you overtrade the market you are just increasing your risk exposure. Most of the successful traders do nothing 99% of the time. You need to learn how to stay on the sidelines. Never place any trade unless you are sure about the trade setup. Even after having the best trade setups, the expert traders assess the potential risk-reward ratio. If you don’t trade this market with high-risk reward ratio, chances are very high, you will blow your trading account.
Being a novice trader you should never trade the live market. The market is extremely volatile in nature and you can’t make any profit based on gut feelings. You have to develop a unique trading system so that you can easily make a profit in any market condition. Use the spread betting demo account to learn to trade. In the demo account, you don’t have to lose any real money. Try to develop a simple but effective trading system. Read a lot of books and articles so that you can get a clear idea about this financial industry.
Every trade has risk
The first thing that you need to know as a Forex trader is – every trade has risks. You cannot make money without taking the managed risk. From the professional to the part-time traders, everyone is taking the same risk to earn money. When you overtrade the market, you place too many trades at a time which eventually ruins your risk management plan. You can be successful in one trade but it’s not possible to win all trades. Some of the trades will lose and this is where you might even blow your trading account. So make sure you are not trading this market without any risk management plan. The more you are placing trades in Forex, the more risks you are taking with your money. Overtrading is not a good strategy to make profit.
The loss is greater than your winning
Many people over trade in Forex and also make money. They do not make the profit because the loss is greater than their profitable trades. This is one of the risks of overtrading. You place many trades and you make the profit in some of the trades. You think the other trades will also be successful and when they are not, you lose money. This loss is always greater than your winnings because the Forex market does not give money to all traders. The professionals, the successful and the disciplined traders only, make the money.
It is harder to look after all the trades
People cannot make money with their one trade and you are thinking of placing many trades at once and looking after them. This is not easy and many people lose money when overtrading.