Are you over-trading?

From childhood, we’re taught that hard work is the key to success in life. We take exams at school, write reports and essays all with the goal of ultimately passing our subjects with flying colours. This repeats itself with A levels and then University. The common theme is that hard works yields results. Even once we join the working population, those with a good work ethic tend to do better than those that don’t.

No matter where you look, captains of industry, successful entrepreneurs and long term investors will all say that part of the key to their success has been the blood, sweat and tears they’ve put into their chosen endeavours. The same is true for traders too. The most successful have usually put in a great deal of hard work to get to where they are.

However….. There’s a fine line between working hard at trading and over-trading. The skills we need for success in most other careers are not exactly the same as those we need for trading. You see if we sat down at a desk in a company office and did nothing for several hours, it’s likely we would soon be reprimanded by our boss for not being productive. But in trading, sometimes not physically doing anything is exactly the right thing to do.

Too many times, traders are overcome by their desire to feel like they’re ‘doing something’ and so start trading rather than being patient and waiting for the right setup to come along. I always say that as traders, 90% of our time is spent monitoring the markets, action is only around 10% of the time.

Sun Tzu once said “He who knows when he can fight and when he cannot will be victorious.” This is perfect advice for us as traders too. Trade to win, not to satisfy your desire to be seen to be doing something. Just remember cash is a position too….

Join Charlie on his special webinar “How to turn a $10k into a $100k account on 2nd June at 7pm – click here to sign up

Over to the markets, last week I discussed the Euro dollar and the potential for weakness ahead. It broke below the 50 day moving average (black line on chart) and still has potential downside space until next key support. With the view that the FOMC are more likely to increase rates in June, we’re seeing dollar strength come back into play. Although in the early part of this week we could see a relief bounce in the Euro, I would be looking for signs to then start fading any rally in expectation of another push for new lows.


Have a great week

Charlie Burton

Join Charlie on his special webinar “How to turn a $10k into a $100k account on 2nd June at 7pm – click here to sign up

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