Overtrading: How to Tell You Are Trading Too Much and Fix It

Overtrading means trades that were not in the plan. It is not about volume of activity but the gap between what you described as your strategy and what appears in the account history.

What it looks like in numbers

Say your expectancy is +0.2R per trade with 0.05R of cost per round turn. Three planned trades a day give +0.45R.

Add six impulsive trades with zero expectancy: they bring no profit but they bring costs — minus 0.3R. The day's result nearly halves while it feels like you worked three times as hard.

That is how overtrading kills accounts: not with a losing streak, but by slowly subtracting commissions and spreads from a working strategy.

The signs

• Trades outside the hours you actually trade.
• Entering right after closing a loser.
• Increasing size after a loss.
• Being unable to write down a coherent reason after the fact.
• The terminal open all day with no specific task.

Three limits

Daily loss limit. 3–4% of the account. Hit it and the terminal closes until tomorrow. This works better than any amount of motivation.

Trade count limit. A fixed number of entries per day. Scarcity forces you to pick the best setups rather than the first ones.

Write the reason before entering. Two lines: pair, reason, stop, target. Having to articulate a reason filters out most impulsive trades on its own.

Read next

• Risk management
• Drawdown
• Broker commission