Quality over Quantity: Reasons why the quality of your trades is more critical than the quantity
Read this article to understand why the quality of your forex, futures, and stock trades matter the most!
Quality over Quantity: Reasons why the quality of your trades is more critical than the quantity
A lot of forex, futures, and stock traders trade like they are worried about missing a big opportunity. However, they forget that the financial market has been here for years and would still be here for more years to come. The financial market operates on a recurring economic cycle, so even if you do miss an opportunity, it will be back again.
If you didn't trade or invest in the forex, futures, and stock market today, there's always a chance to trade and invest tomorrow. One crucial factor that contributes to the failure of several traders and investors is overtrading. It's like a disease that eats into your trading account and destroys it over time.
What qualifies as overtrading?
If you realize you are always entering new forex, futures, and stock trades or you are constantly obsessing about your trades and mostly preoccupied with analysing the markets, then you are overtrading, or you are about to. There are many things to note about overtrading, but the fundamental truth about it is you'll lose sleep and money at a very high rate.
With our Supply and Demand trading approach, we have trades that last weeks, months, or even years. We typically only enter new trades and investments about six to ten times in a month, and we also very meticulously select our trades and investments and ignore the ones that do not meet our predetermined set of rules.
Here are the effects of overtrading on both your trading account and results:
Excessive trading waters down your trading edge
There are only a limited number of trades that will fit into your predetermined Supply and Demand trading strategy. If you keep breaking your own rules and trade and invest in anything that comes your way, it will merely dilute your trading edge. Your trading edge increases your chances of success, and taking low-quality trades will reduce your trading edge to a point where it is just random and not specific in any way.
Market noise vs. Quality trades
There are distractions in the financial market referred to as market noise, and there are low risk, high reward, and high-probability trade setups. The main point here is the fact that you must know the difference. If you can't distinguish real Supply and Demand setups from market noise, then you'll end up entering trades that are not worth you risking your money over, thus watering down your trading edge even more.
Before you begin risking money in the forex, futures, and stock market, you have to make sure you know exactly what it is you are doing. You have to educate and equip yourself well enough, so you don't end up overtrading.
Too much of anything is always bad
If you examine various human endeavours, trading and investing included, doing too much or getting obsessed over it is usually a negative pointer and most times result in an adverse outcome. We have heard about how too much coke or Mcdonald's can be bad for you, but you should also know that even drinking too much water or excessive workout could be equally bad for you. Getting obsessed with your loved ones can also push them away from you because it communicates neediness, and it is plain unattractive and annoying.
One fact is that too much of anything can either hurt you or kill you. Overtrading will definitely ruin your trading account. We are mentally programmed to get addicted to so many things. Drugs, games, blue light, junks, alcohol, gambling, and trading have one thing in common, and they are all dangerously addictive.
We are naturally wired to get addicted to so many things, and this is an evolutionary trait that came in handy and was instrumental thousands of years ago when men were hunters and gatherers. In recent years, however, this trait has become a dangerous thing due to the many distractions and temptations of modern society. The trait that was once good has now become something that could kill us if control is not applied.
Our brain works on a reward-based system, and certain things help us release a feel-good hormone called dopamine. When anything feels good, we get a release of dopamine, and when that feeling wears out, we are usually left craving for more. Drugs like cocaine or heroin give that feeling, and even though we know they are bad for us and are aware of all the adverse side effects, we become quickly addicted to the feelings they generate, and we always end up going back to it. Now, other helpful habits also release this feel-good hormone, such as exercising, which is not dangerous to our health.
Being equipped with this crucial information about how the brain works, the responsible thing to do would be to consciously train our brain to get addicted to positive thoughts and habits that would actually contribute to our overall success as against getting hooked on bad or negative habits.
Now, as a forex, futures, and stock trader and investor, we have a laptop in front of us, flashing images of numbers and charts, and we can enter a trade with the push of one button. When we enter a few trades and get a win, it feels great, and the brain likes that feeling, so we get the urge to enter more trades and repeat the feeling, this is precisely how overtrading starts, and we slowly get addicted to the sensation it generates.
The single most effective way to prevent this is to plan out your trades in advance and have a Supply and Demand trading strategy you adhere to. This way, your trades are planned in advance, and your behavior in the forex, futures, and stock market is dictated by these predetermined criteria. If this is not done before you start trading, you'll find yourself chasing every trade to get the good feeling that is associated with winning which will only lead to more losses and a drained trading account.
Remedy for overtrading
Our expert traders at our online trading academy have been trading for quite a considerable number of years, and we have had the privilege to train new traders who have also graduated into full-time trading or have been able to generate a steady source of second income from trading and investing the forex, futures, and stock market. The advice we are about to give you comes from many years of our expert traders' experience and also watching our online trading academy students trade and invest successfully. It is in your utmost interest to follow the advice, and it will successfully cure you of the disease of overtrading, which is most likely currently destroying your trading account.
Set a limit for your monthly forex, futures, and stock trades which should be between 1 and 10
When you're creating your Supply and Demand trading strategy, some parts would be rigid, and there are parts within the rigid ones that are quite flexible. For example, how you enter a trade, how much you risk per trade or how you place your stop might all be a bit flexible. However, the number of times you enter new forex, futures, and stock trades in a month should be between 1 and 10, anything over that most likely signifies that you are overtrading already.
Patiently wait for setups that match your Supply and Demand trading strategy and apply necessary filters
Filters refer to the things you watch out for, to determine if a forex, futures, and stock trade is worth taking or not. The focus is on low risk, high reward, and high-probability forex, futures, and stock trades, and you should patiently wait for them and not waste your resources on trades that aren't worth it. Just like a sniper has a limited number of bullets, you also have a limited trading account, and it will better for you to use caution to avoid wasting all your resources on losing trades.
Set and forget and get a life trading approach
One of the reasons forex, futures, and stock traders and investors tend to trade excessively is because they do not give their trades enough time to mature before they jump into another trade. You should always remember that trades and investments that are worth it take time and will not generate enough profit overnight.
If you want to get the big market moves, you have to be patient enough to wait, and one way you can do this is by setting your forex, futures, and stock trades and leaving them. This increases your chances of making low risk and high reward trades, and it also reduces your exposure to the temptations of the market. If you want to know more about our set and forget and get a life approach, please read this article here
Limit yourself to unidirectional markets moves
Many forex, futures, and stock traders and investors tend to enter trades on an unstable market, and the moment it starts moving against them, they jump into another trade. The horrible feeling associated with losing money, coupled with the dopamine chase, will result in so many wrong decisions. If you trade in a market that is clearly moving in one direction and trending, you are less likely to overtrade.
Scaling up your trading business
We ensure that all the students at our online trading academy follow a milestone plan and are measured against specific KPIs. They are only permitted to increase their dollar amount risk per trade after a particular milestone has been reached. As a new trader, you have to understand the importance of consistency. Once you are consistently profitable, then you can steadily increase how much you risk per-trade, but if you put making money first before building the right habits, you'll most likely end up losing money.
The ugly truth you would have to accept is that there aren't enough low risk, high reward, and high-probability trades in the market every week or month. This is why trading frequently is not advisable, and it will only reduce your trading edge. Some forex, futures, and stock traders and investors still go ahead and enter several trades, and they end up losing money. The Supply and Demand trading strategy we use is built on a low-frequency approach coupled with low risk, high reward, and high-probability trade setups.
There are skills to be learned in order to master this and be able to spot low risk, high reward, and high-probability trade setups. Through our well-crafted courses and live trading sessions coupled with the set and forget and get a life trading approach we teach, you can be sure you'll be able to filter out low-quality trades and be profitable in the long term. This method helps to prevent overtrading, which will have a significant impact on your trading account.