Over trading can be one of the most dangerous things in forex trading. In this episode of Truth About FX, Walter talks about over trading and shares some useful tips on how to tackle it.
Download (Duration: 02:43/ 3.12 MB)
In This Episode:
00:54 – tripled our account
01:13 – over trading
01:38 – trading partner
01:54 – risk manager
Ask your self: am I over trading? [Click To Tweet].
You can have someone as your trading buddy and help you manage your trading. [Click To Tweet].
Create a checklist that will help you set-up your trade signal. [Click To Tweet].
Announcer: Sometimes, forex trading is a wild and wooly place to be. That’s why Hugh is here, to post your questions to Walter, the naked forex guy. Hugh’s got questions and Walter’s got the answers. Here at the Truth About FX Podcast.
Hugh: Alright Walter, today’s question is: my number one trading challenge right now is learning to play hard-to-get. In other words, it’s like in dating. When I look to enter in position, I feel that I’m an ECD, a.k.a a trading whore. What do you say to that?
Walter: This is funny. Here’s the issue. It’s really… and this is a common one and I’ve had this one when I first started trading and for good reason. My friend and I, when we first start trading forex, we tripled our account over the first two nights and we made all this money.
One of the things we thought was –and it made sense for me — with this much money, trading to EUR session at night in California, why wouldn’t we just go ahead and trade more often? Get more trades and make more money.
It’s really an issue of over trading. The question really is: am I over trading? There’s a couple of ways to tackle this. One, is you get a checklist and all of these things has to be set up for your trade signal. Otherwise, you don’t take it.
If you still kind of talk yourself into these trades even when you have this black and white piece of paper in front of you that says, “I’ve got to have these five things or these ten things before I take the trade”.
The other way to do it is to have a trading partner. This works better if you’re in a hard time frames like the daily or the weekly charts but, what you do is you basically have to get the “okay” from your trading partner.
This is kind of like, the banks work like this too where they have a risk manager. The risk manager has to make sure that you’re in your parameter of your risks and that sort of thing, so that’s another way to tackle this.
You can actually have someone like a trading buddy that you work with and that trading buddy allows you to… Basically, gives you the stamp of the approval and say “yup, this is good, you can go.”
So, that’s another way to do it. But, again that’s not going to work if you’re trading the one-hour chart or something like that. You probably can only able to do that if you and your trading buddy are in the same time zone or sort of trade hard timeframes like I do.
Hugh: Okay. Yeah, great point. Thanks for sharing that.
Walter: Alright, Hugh. See you soon.
Hugh: Bye. Talk to you later.