How to avoid overtrading in the Forex market

Nenad Kerkez
May 16, 2016 · 4 min read

Dear Traders,

No way that you have never experienced overtrading from being overly confident right?

Like me — your answer is probably that you have.

And most likely it was when you first starting trading, because experienced traders will have already worked this out…

…they wouldn’t still be successful if they hadn’t.

Overtrading is one of the worst enemies a trader can face.

And experienced traders will have already worked this out — otherwise they wouldn’t still be

You will find many definitions for overtrading — from trading too often in a short period of time, to going way above your risk limit threshold.

In my opinion, overtrading is a term coined by the weak minded who trade with emotion and are looking to place a label on their failure.

But regardless of the definition, most day traders have to deal with it and develop the discipline to overcome it if they want to survive in the Forex industry.

But for others the fear of losing money can be a bigger problem, because it keeps them from pulling the trigger as often as they should.

However, if you have a valid reason to believe that one setup is potentially less profitable than another — then there’s no reason to trade it.

Additionally, if the market has exceeded some statistical range for the day:

…then that could also be a valid reason to shut up shop…

…though this should be reflected in the rules that determine the validity of such a setup.

Obviously the market doesn’t care how many trades a retail trader has made.

Continue with overtrading and the market will slap you.

It’s like the gambler who believes that his lucky streak is about to run out, so he pushes forward until he burns out.

Recognising the signs of overtrading is therefore critical to your trading success.

Sure signs of overtrading

The following list gives you an overview of overtrading warning signals.

I suggest you familiarise yourself with these signals, so you can recognise them and learn to avoid them like the plague.

  1. After a few wins, you become overconfident.

You think that you are unbeatable, an absolute ruler of the Forex kingdom.

And you start taking trades immediately.

You forget all the rules.

  1. You have a losing streak or a few losing trades.

There’s an immediate sense of pressure to earn the money back.

You jump at any opportunity that shows the slightest possibility.

  1. You follow every signal that your system gives you and forget about the basics of price action.

Instead, you unconsciously focus on less-than-perfect trade setups.

  1. If you do not trade often, you get impatient.

You turn on your impulsive side, start taking bad setups and stay in the bad trades longer that you should.

This leads to losing good opportunities and eventually you lose focus.

It becomes a vicious spiral.

The remedy for overtrading

What follows is a short subscription to remedying overtrading.

This prescriptive list is not from a medical doctor:

…but it will help save you from making impulsive or emotional trades…

…that will eventually destroy your investment.

  1. Develop a trading plan with a clear and concise journal.
  2. Review all of your trades each day.
  3. Wait for pullbacks instead of adding too much to a trade.
  4. Find a distraction like TV, social media or a dvd — it doesn’t matter what you do, just take a break.
  5. Listen to Binaural Beats.
  6. Learn to read the noise (more on this in the video below).

Now ask yourself again:

  1. are your objectives realistically based on the practical capabilities of you and your trading method; or
  2. are they are based on vision and hope?

You have to know when the market is most likely to be active, especially when there will be volume.

No matter what you read or do, there will be moments of madness in any traders career.

Trading requires incredible discipline.

If you are slack or deviate, it will kick you out of the market and many will be gone for good.

Check out our educational webinars to learn more about avoiding overtrading and feel free to place your experiences, questions or other feedback in the comments section.

Cheers and safe trading,


Originally published at

Nenad Kerkez

Written by

#Investor in top 10 on @forexfactory:, #trader behind CAMMACD™ strategy & #Forex educator at are my own