In speculation and in financial spread trading it is best not to overtrade. Overtrading has been the bane of my trading career to date. I have mastered timing, I have mastered money management but I still find myself failing when it comes to overtrading.

So why do we overtrade? I cannot answer for anyone else, but I know why I do it.

Trading is like no other business I know. You can’t bring the market to you, it cannot be forced; and you cannot impose your will. You can push for sales, you can increase productivity or improve quality control of your product. But when it comes to Mr Market, a can do attitude can be lethal.

Sure you can read books, test systems, chat to other traders. But when all said and done trading is a task completed with minimal effort;  requiring only the click of a mouse button and the management of trading positions once a day. In a sense it is the easiest business in the world. And that is why we all have the budding trader inside of us.

But there are problems with such effortless ease. We humans like to create, we like to achieve. We like to force our will onto things. Speaking for myself I like to be busy, even on the toilet I need to be reading a book otherwise its one humungus waste of my day ( I know, I need to chill a little). I think many are drawn to day trading for the simple reason they feel they are doing something. At least day traders have a sense of a full working day, even though by and large they are the biggest losing group of traders.

Anyway having to do something, either through boredom or through wanting to push your trading business forward has always been counterproductive for me. On balance I always lost money.  The losses always dented my equity curve and my trading psyche suffered as a result.

Trading less and with a suitable edge would have saved me a small fortune and a few grey hairs to boot.

I am not alone. They say some of the biggest and constant losers in the trading game are often the most successful in the business world. Go getters, movers and shakers, people who went out and carved their success onto the world. But in the trading world profts can rarely be maintained that way. And that is why alot of traders go to the wall. As Jesse Livermore used to say “the big money is made in the sitting and waiting”.

I do not overtrade for the buzz, I overtrade to make things come quicker. More fool am I. It is wrong and I know it. Overtrading has been my hardest lesson to learn and I am still learning it.

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Tags: financial spread trading, online spreadbetting, overtrading, Trading Psychology

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