What Is Overtrading in Forex – How Can You Stop It?

There are no rules and regulations against overtrading in Forex, which is often responsible for ending up with a loss. It is a common trading mistake that retail traders make frequently. Even the traders can’t understand whether they are overtrading or not. You will rarely realize that you are actually overtrading. However, there are some ways that you should follow to avoid overtrading. Top Forex traders are so successful because they are very patient and wait for the right opportunity.


Why do people overtrade?

When price fluctuates a lot, as a human being, we think that we should take advantage of the fluctuation because nobody wants to miss an opportunity to make a profit. This is called emotional trading, which is a major cause that diverts people to overtrade. Always remember that in Forex trading, increasing the amount of buying and selling leads to losses, and there are several reasons behind it. The investment industry will never care about your efforts and dedication. You can make profits just by having a stroke of good luck.

Are you overtrading in Forex?

This is a great problem because most people don’t realize even when they are overtrading. If you want to know either you are overtrading or not, remember that overtrading is an act of trading frequently. Best traders wait patiently because they know that quality setups will take time to generate a successful result. The setup may take three weeks or even three days to materialize, but you should never worry about that. Be confident like the top traders in the Mena region. Study the different aspects of Forex trading business so that you can boost your trading skills without having any major problem.

Best traders always maintain their focus on protecting their capital, and only after the confirmation, they enter into the deal. There is another sign that will tell you if you are overtrading or not. You may often exit for a loss, but you already know that you should never take that trade. It is a strong sign indicating that you are overtrading.

The golden rule of overtrading in Forex

Pareto Principle is regarded as the golden rule of overtrading, and it states that 80% of the profits will come from less than 20% opportunities. It clearly indicates that you have to wait to make profit. Great investors invest their earnings in hundreds of smaller companies, but they expect 60% of the hundred companies will make the profits. Be careful about the trade execution and get ready to embrace the losing trades. So, the easiest way to make money in the market is to wait and not to trade frequently. Focus on the quality trade executions to improve your win rate at trading.

Wait for the perfect opportunity

To be a successful Forex trader, you must be very picky and careful with every trade entry. Good trade entries are not going to come again and again, and most of the time, people miss it because of not having proper knowledge about good entries. To be a successful trader, stay aside and keep calm while the market doesn’t come with any opportunities. If you are not going to stay and remain calm, you will surely lose the greatest opportunities. There are lots of traders who have enough skills to make money from Forex trading, but they can’t resist themselves from trading even when the market is not providing any good opportunities.

How can you stop overtrading?

The first and the most important suggestion is that – you have to stay sharp and follow a strict rule while finding Forex trade entries. To become successful, you must follow a successful long-term method and keep faith in that. If you notice that there are no good trading entries, don’t make any trades. Remember that – you have to resist your temptation.