Trading on the forex market is something that many people consider. However, it is also something that you can easily become addicted to and this will lead to excessive trading. Of course, excessive trading is not always brought on by FX trading addiction. There are a number of others reasons why you could be FX trading excessively. Some traders feel that the more they trade the more they are going to make. It is important that you actually learn how to avoid excessive trading and all the issues that can come from this.
Have a Trading Schedule
The first point that you should consider to avoid overtrading is to have a trading schedule. The trading schedule will tell you when you should be trading and when you should not be trading. There are a lot of traders who add more information to their schedule than this. These traders will allot times for completing different actions.
In the hours before they should be actively trading they will complete all their analysis for the day. They will also have time after their trading to review what they have been doing in the day. By having these times you are able to stop excessive trading that takes you out of your trading hours.
Having a Maximum Trade Number
There are a number of traders who stick to their trading schedule, but still find that they are overtrading. These traders are generally opening too many trades during their trading hours. Some traders find it hard to determine when they are opening too many trades. This is partially due to certain FX trading strategies requiring a high volume of trades to be completed. If you are using one of these strategies then you have to set a maximum number of trades per day.
When you set your maximum number you need to base this on information that you have gathered. You need to consider the number of trade signals that you get in the average day. You have to consider whether or not you are going to trade on all of these signals. Most traders will only trade on a handful of signals as these are the ones they have determined to be the best. You should set your a trade allowance for the day at this number or slightly higher. Having this number should help you limit the excessive trading that you are completing.
Sticking to Your FX Trading Plan
Before you trade live you need to have a trading plan that you have tested on the demo account. This trading plan is the key to avoiding excessive trading. You have to stick to this plan as much as possible. When you divert from your trading plan you are completing emotional trades and this can easily lead to excessive trading.
When you stick to your trading plan you are going to wait for the right trading signals. Many traders who trade excessively are not waiting for signals from their trading plans. If you combine the sticking to your trading plan with the trading schedule you should have no problem in avoiding the dangers of excessive trading.