Today is the second in a 10 part series of “Trading Rules to Live and Die by”.

Don’t Over Trade.

Those of you that have participated in any of my training classes will be familiar with the following statement. “Don’t trade unless it’s as easy as going across the room to pick money up off the floor.” I am only passing on what I have heard other places, and now apply to my trading.

Trading too often can be as dangerous as trading to many lots. Just because you are in the market doesn’t mean you will make money. Throwing mud at a wall only gives you a wall covered in mud. Make sure that the trades you take are the high quality trades you want.

You can do this by knowing two things, your trading strategy, and your personal tendencies. Most people over trade out of frustration.  A “Well that didn’t work what about this” mentality will kill you. Knowing your strategy will get you half way there. Set your strategy in stone, and stick to it.

If you know you have a hard time opening a trade, automate it. If you know you have a hard time staying in a trade long enough to realize its potential, open the trade and walk away from the computer until it closes one way or the other. Make sure your strategy works around your idiosyncrasies. 

By knowing your strategy and your faults as a trader, you can begin to overcome the problem of overtrading. Take the steps necessary to accomplish this, and you will see your profit percentages start to rise.

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