What's the best method to keep yourself from overtrading?

Originally posted by murray t turtle
Quicktrade and Nitro quote.


Watch the trend,that is the trend in your equity account. Written trading plan helps also.

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''Granny smith apple''- Dr. Van Tharp quote:cool: [Won't help overtrading, but a good quote anyway.:cool:
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I probably have one of the most explicit trading plans possible for a discretionary trader. In addition, watching the P/L has been a bad thing for me, as it has on accassion gotten me out of a trade to early.

When I said I did not know what it means to overtrade I meant it - _I_ don't know what it means - there neither too many nor too few trades in my day - there are as many as the market offered me. None looked better than the other given my current skills...

nitro
 
Some excellent suggestions here. Two I would add have to do with price targets and stops.

1. If you have targets on your trades and you're consistently reaching them, you're probably not overtrading. On the other hand, if you're not reaching them, or the number of losing trades outweigh the number of winning trades, perhaps you should try using trailing stops rather than price targets. One such trade may make your day.

2. When you're stopped out, try to determine why your stop was triggered. A bit of advice was given to me some time ago by a professional trader that has prevented me from throwing myself against the glass: stop trading after three consecutive losses. When this situation occurs, the trader is most likely not in tune with the market, and until he figures out why, he's just guessing and hoping.

--Db
 
Originally posted by Indie Cator
I

When you really know what you are doing you can make 20+ trades a day and all profitable -
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what planet do you trade on Indie? :) I want to go there.

gs
 
Originally posted by dbphoenix
A bit of advice was given to me some time ago by a professional trader that has prevented me from throwing myself against the glass: stop trading after three consecutive losses. When this situation occurs, the trader is most likely not in tune with the market, and until he figures out why, he's just guessing and hoping.
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If your trading plan is good, why stop just because three previous trades didn't pan out? Of course, there could be a number of reasons the first three don't work. Whipsaw..... no trading plan is perfect.....didn't properly follow plan, etc. If losses are kept small and one has a good trading plan, I don't see why a person would not execute a good setup.

On the other hand if a trader is taking too large of losses (like me yesterday:mad: ), then I can understand why one would elect not to continue on a particular day. Of course, also, as you state, one must (at least) stop long enough to figure out what is wrong.

Bottom line: Follow your plan / keep losses small.

BSAM
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Originally posted by BSAM
If your trading plan is good, why stop just because three previous trades didn't pan out? Of course, there could be a number of reasons the first three don't work. Whipsaw..... no trading plan is perfect.....didn't properly follow plan, etc. If losses are kept small and one has a good trading plan, I don't see why a person would not execute a good setup.

On the other hand if a trader is taking too large of losses (like me yesterday:mad: ), then I can understand why one would elect not to continue on a particular day. Of course, also, as you state, one must (at least) stop long enough to figure out what is wrong.
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Figuring out the problem rather than barrelling ahead without paying any attention to what the market is trying to tell you is the chief objective here. If, for example, one is being whipsawed, he may have chosen the wrong plan. If he chose the correct plan but isn't following it, he needs to figure out where he's off couse.

If one is being stopped out, a message is being sent. It pays to figure out what that message is.

--Db
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Originally posted by dbphoenix


Figuring out the problem rather than barrelling ahead without paying any attention to what the market is trying to tell you is the chief objective here. If, for example, one is being whipsawed, he may have chosen the wrong plan. If he chose the correct plan but isn't following it, he needs to figure out where he's off couse.

If one is being stopped out, a message is being sent. It pays to figure out what that message is.

--Db
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Agreed:).

BSAM
 
Originally posted by dbphoenix


Figuring out the problem rather than barrelling ahead without paying any attention to what the market is trying to tell you is the chief objective here. If, for example, one is being whipsawed, he may have chosen the wrong plan. If he chose the correct plan but isn't following it, he needs to figure out where he's off couse.

If one is being stopped out, a message is being sent. It pays to figure out what that message is.

--Db
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If you are trading mechanical systems that have been thoroughly tested you are better off to trade through the equity drawdowns. Stopping and starting based on the results of the last few signals can lead to system whipsaws that do more damage than sticking with the system.

Of course, there are those times when you have to evaluate the system and decide if it is still really working as intended.

I'm speaking from my personal experience with mechanical systems. Trying to time the periods to trade or stand aside almost always backfires.

gs
 
Originally posted by ges


If you are trading mechanical systems that have been thoroughly tested you are better off to trade through the equity drawdowns.
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If you are trading a mechanical system that has been "thoroughly tested" and are encountering a series of unexpected equity drawdowns, I suggest you go back to the system and figure out what's wrong.

--Db
 
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