Strategy Video: Am I Over or Under Trading, And How Do I Correct It?
• Trading too frequently or infrequently can be a sign of many trading pitfalls
• Under-trading can be a sign of fear, deviating from strategy or even a shift in underlying market activity
• Over-trading can indicate bordome, an overly simple strategy or an increased dependency on emotions
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After a particularly quiet or active week of trading, it is good to look back and ask yourself: am I over/under trading? There are periods where an increase or decrease in underlying market activity can lead to a change in the number of trades that we take. However, a change in our participation in the markets can also signify underlying issues that can sabotage our trading. The more common pitfall is over-trading. An abnormally high number of trades and in specifically an increase in the percentage of losing trades overtime indicate we are over-trading. Emotions trumping strategy is often the culprit here. Less appreciated and surprisingly common is under-trading. When are are 'gun shy' or missing great setups, it is also most often associated to our strategy. We look at both extremes and how it can effect our trading in this weekend Strategy Video.
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