A common mistake traders make is trying to open too many positions at once.
They believe that a greater number of positions will translate into higher profit. “If you open trades in multiple pairs, one of them will make a big win.“
The more setups you make, the greater your chances of winning, right?
mistake!
This isn't a lottery, y'all!
If you want to maximize your opportunities and skills, you may want to consider being more selective in your trades.
For one thing, it opens up a lot of positions Eases your capital allocation.
When you've done your research and are confident about where the price is headed, wouldn't you want to take as much risk as possible in your trading?
Don't reduce your trading capital by 20% just because you want to acquire a popular asset that can only grow by 10% in the same period of time.
Excessive trading It refers to taking too many trading setups to the point where you lose your market advantage. This is because you are spending Less time and research into every situation.
Instead of browsing charts and tweets on eight assets, you can perform multiple chart analyses, backtests, and talk to knowledgeable sources about where the prices of the three assets could be headed.
The more information you have and the more scenarios you prepare for, the less likely you are to miss opportunities and make emotional decisions.
There are a lot of open trades too Impairs your concentration.
Unless you're a bot, you can realistically focus on only a few opportunities. Preparing for different market scenarios will do your account no good if you are not there to execute the trading plan as soon as they happen.
One of my favorite trading psychologists, Dr. Brett Steenbarger, explains that the root of overtrading is… Mismatch between profit expectations and market volatility.
In other words, traders often feel the need to follow multiple market movements in order to achieve their goals.
This type of mindset may cause a trader to overestimate his trading skills in an attempt to reach his goals and mentally convince himself that he had a good trading day.
You see, most of us have become accustomed to believing that we must work harder and put in more effort in order to achieve better results. While logging 10,000 hours of intentional practice has its advantages, it is a mistake to think that working harder means closing more deals.
Working hard means taking the best (also known as high probability) trading setups.
Of course, this is much easier said than done, so here's a simple trick that can help you avoid over-trading:
Take only one trade each day.
That's right, no exceptions. If you hit a big win, you're done for the day. If you lose, you're done for the day.
Day trading coach and author Jalen Woods This is called a one-bullet action plan.
Setting this absolute one-trade rule forces you to think like you have one bullet left, meaning you have to aim correctly and pull the trigger at the right time to make the most of your one shot.
you have to Be picky In filtering the “best” for today and at the same time be cerfull In catching the move.
in the end of the day, Our job as traders is to get the maximum return for the capital we have.
While selectivity in your trades will not guarantee consistent profits, it can certainly minimize losses and hopefully keep you in the Forex game long enough to consistently profit.