I wrote a post called The Stop loss Enforcer. It's under the psychology section. http://www.elitetrader.com/vb/showthread.php?threadid=10075 Click on it and you will be on your way to a more disciplined approach to trading and you will find yourself overtrading less.
I probably have one of the most explicit trading plans possible for a discretionary trader. In addition, watching the P/L has been a bad thing for me, as it has on accassion gotten me out of a trade to early. When I said I did not know what it means to overtrade I meant it - _I_ don't know what it means - there neither too many nor too few trades in my day - there are as many as the market offered me. None looked better than the other given my current skills... nitro
Some excellent suggestions here. Two I would add have to do with price targets and stops. 1. If you have targets on your trades and you're consistently reaching them, you're probably not overtrading. On the other hand, if you're not reaching them, or the number of losing trades outweigh the number of winning trades, perhaps you should try using trailing stops rather than price targets. One such trade may make your day. 2. When you're stopped out, try to determine why your stop was triggered. A bit of advice was given to me some time ago by a professional trader that has prevented me from throwing myself against the glass: stop trading after three consecutive losses. When this situation occurs, the trader is most likely not in tune with the market, and until he figures out why, he's just guessing and hoping. --Db
If you are trading mechanical systems that have been thoroughly tested you are better off to trade through the equity drawdowns. Stopping and starting based on the results of the last few signals can lead to system whipsaws that do more damage than sticking with the system. Of course, there are those times when you have to evaluate the system and decide if it is still really working as intended. I'm speaking from my personal experience with mechanical systems. Trying to time the periods to trade or stand aside almost always backfires. gs
If you are trading a mechanical system that has been "thoroughly tested" and are encountering a series of unexpected equity drawdowns, I suggest you go back to the system and figure out what's wrong. --Db