Problems with Overtrading & its solution
most traders will face the problem of overtrading at some point in their trading careers. In this trading psychology session Brannigan shares a process for tackling the underlying problem that causes this behaviour.
The common solution for overtrading is to put a few rules in place that serve as a barrier from making this mistake. However, these barriers tend to yield short term results and do not lead to actually overcoming the underlying problem.
An alternative strategy is to implement a marginal gains based process. This type of approach breaks the problem down into its core elements. For example, Brannigan lists his root causes of overtrading to be a lack of preparation, impulsiveness, too much noise, and a lack of trust.
By enforcing a process that leads to a percentage of marginal gains on each element, the overall problem soon improves. It's also important to exercise trial and error with this approach, as each solution that you come up with be unique to you as a trader. Further, the wisdom you'll gain from a trial and error approach and looking into yourself will not only lead to gains in your trading, but will extend throughout your life.
Seasoned derivatives expert with over 6 years of experience across equities, derivatives, and commodities markets. With a proven track record of successful trading and deep market insights.
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