How to Stop Overtrading the FX Market

Stop Over Trading The Forex Market

Stop Overtrading The FX Market

Frustrated! Angry with yourself? Cant help yourself?

Sound familiar? Every trader goes through this at some time or another, its just human nature. But how can you keep this horrible emotion under control?


  1. Expectations – You’ve heard of people making millions and you want some of that
  2. Poor Trading Education – Don’t understand how the market works
  3. No Routine – Not sticking to, or believing in your strategy.
  4. Financial Pressures – Quick wins needed to help you out
  5. Risk Management – No regard for the amount of cash you are risking
  6. Ego – You want people to think you are successful because everyone else says they are


  1. FOMO – Fear of Missing Out – Caused by 1, 4 and 6 above
  2. Gambling – Caused by 1, 2, 3, 4, 5 and 6 – All of the above
  3. You Must Trade – Caused by 1, 2, 4 and 6
  4. Large Losses – All of the above
  5. Ignoring your trading strategy – Caused by 2, 3

You will be subject to some or even all of these causes, which inevitably ends up in overtrading. Overtrading which by its very definition also means lack of risk/capital management which can only result in a loss. Simply there is more risk of loss the more trades you do. Reducing your trades to only those of your trading strategy significantly increases your chances.

All of these end up in you overtrading!

Risk – Limiting the downside and maximizing the upside

It doesn’t matter how you look at it, whether you are trading FX or any other asset class, the holy grail is managing risk effectively. Whilst I never read trading books (as I believe in my strategy) I do read books on the best traders in the world, after all they have a proven methodology. Throughout every single interview, book written there is one 0veriding thing in common with them all, reducing the downside and maximizing the upside for ‘their clients’.

The worst loss at any one time you would have experienced as an investor when your capital was managed by Bridgewater Associates during the last 40 years would have been -3.93%!! This is an extraordinary minimal drawdown, but it demonstrates the difference between the real pros and us. It also goes someway to explaining why our T4TCapital Trading Program has a Weekly Loss Limit of 2% and a Maximum Drawdown of 4%. 

Related Articles