Overtrading is one of the worst forex trading mistakes you can possibly make, whether you are a long-term trader or a novice to the industry. Once you begin overtrading your forex trading account balance will suffer as a result, gradually getting smaller and smaller as you battle your way through trade after trade with less and less luck.

Yes, there are plenty of other forex trading mistakes to be made (think overleveraging and even under capitalisation), but the mistake with the biggest long-term impact on your forex trading account is overtrading as this is one of the most consistent pitfalls a trader can experience.

How to Nip Forex Overtrading in the Bud

It can be difficult to identify overtrading before it’s too late as there is a fine line between trading regularly and trading too much. However if you have a solid forex trading strategy that you stick to unyieldingly then you should never fall into the overtrading trap, particularly if you use your trading strategy against a trading plan and a trading journal.

However you will notice that you are trading too much when you gradually begin to execute more and more trades outside of your FX trading strategy. Even if you keep a close eye on forex news and perform regular technical analysis. you may still end up executing one too many trades on the trading platform. This can be a result of:

• Trying to optimise your trading strategy
• Executing a new method on the trading platform before testing it out on a demo trading account
• Obsessively checking your forex trading account balance in a desperate bid to increase it
• Ignoring your trading plan
• ‘forgetting’ to maintain your FX trading journal

Signs that you are Overtrading

Some obvious signs that you are overtrading include:

• Leaving a position open on the trading platform overnight when this is not a part of your trading strategy
• Spending more and more time sitting on a computer trading forex
• Trading multiple markets
• Keeping multiple positions open simultaneously
• Always having a position open even if the market is against you

If you overtrade then you are entering a difficult and stressful environment where you are constantly exposed to market risk. It is better to devise a bulletproof trading strategy that has been tried and tested on a demo trading account. Only then will you be able to trade in a consistent manner that enhances your chances of making a profit.