Dr. Deco's Cure for Overtrading

it would probably make you want to put your head back where it came from

jjf

 

I think I break no confidences when I describe events so far today in our usual Monday marathon group trading therapy session (the group members selected Monday by acclamation as most of them have hangovers on Mondays and by noon on Fridays are eager to self-medicate again). They bring their blankies and pillies with them for market sleepy-time. Today there was a near riot. "What's with the black screen?" Withdrawal symptoms started to pop up almost immediately. Some were seen to curl up in to foetal (we shrinks always spell it that way) balls. Others played with themselves, surreptitiously (or not). Before very long the entire group was chanting in wails of pain "Can we at least surf ET?"

 

But...but...if all those years were WASTED would that not be bull?

Of course, as this is a trading forum perhaps you meant Bull. As the years WASTED is not Bull, perhaps that correlates to WASTED = Bear?

 

oiha,

You are my kind of ETer.

You have a four letter screen name with LESS POSTS than letters in your name.

Although you may be new around here, you do seem to have already picked the general 'tude of the forum.

Although I do not want to break your will, you should know your kind of venom has been spewed around here for so long, us regulars have COMPLETE immunity to it.

 

What is overtrading? (I assume that, the more trades one makes in the shortest possible time period, the more $$$ he will make. AND the more consistent the income will be for that period.)

 

Simple definition.

Overtrading is being short when you should be long and being long when you should be short.

 

In that case 0 is the appropriate number of trades with $0 risked. Any good gambling book will cover this.

 

You are speaking to one who was a sports gambler before I ever traded.

Although my response may have been a bit on the smart ass side, I thought appropriate to the tone of your question, the truth is there is NO such thing as overtrading if the market is going for you.

But if the market be going against you, then you need to stop, take a breath, and REFLECT.

To call the reason for the PAUSE overtrading is as good as term as any to describe the fact, there are times one needs to stop digging the hole that he has put himself in.

 

There is business definition of overtrading that talks about having to many transactions which leads to high transaction costs and thus to an ultimate failure if the business is unable to finance that cost.

Reducing the broker fees, slippage and spread (improving spread to range as well) will help. The rest of the overhead of trading should be fixed and not be affected by the number of transactions.

Disclosure: I am not a successful trader and I have not seen a successful trader operate. I imagine that a successful trader will have the above position

 

FWIW

Overtrading (My definition)

There are time when trading that I find myself behind the curve – and every trade after that is a break even – at best, or a loser – at worst.

Mentally I’ve lost the edge (hard right edge that is), and lost the ability to be detached

At that point – it’s time to stop, take a break and regroup

That break may be for a minute, half hour, hour, rest of the day


My other definition – I’ve reached my daily loss limit – time to stop for the day

Regards

RN