Beat over-trading

 

Our personal trading journeys can often feel like mythic adventures, like the one undertaken by Odysseus in Homer’s classic Greek tale.

In the Odyssey, it took 10 years for our hero to get back to his homeland of Ithaca. Along the way, he had all sorts of tests of character.

My own adventure lasted eight years or so. Testing my resolve, patience and resilience to the max.

I spent years focused on learning new trading methods, in all the hope it would take me to a promised land of consistent profitability,

But ironically it wasn’t new techniques that led to consistent profitability. It was developing interests outside of trading that helped most.

Probably the greatest dragon I ever had to slay on my own epic trading journey was the quest to beat over-trading.

In this post, I’ll tell what did it for me, and hopefully, it will provide food for thought for you too.

 

Too much learning – not good

Us traders are an industrious lot.

We spend years learning everything about trendlines, divergences, interest rate policy and god knows what else.

Consuming endless books, courses, videos and trading systems.

But at some point (if we are still in the game) we finally realise that despite all this effort, it hasn’t really gotten us anywhere.

We’ve spent years chasing our own tail and we’re back to square one, clueless as to what is successful trading really feels like.

We can explain all there is to know about technical analysis, and yet we can’t explain why we’re not profitable.

Common questions concerning trader development include, how long does it take?  And what does it take to be a trading success?

Most answers revolve around spending huge portions of one’s life developing trading knowledge and thousands of screen hours in practice.

That’s what I did, and it’s what most agree is the correct route.

We’re generally led to believe the more we do in life, the better the results.

But that’s not always the case, and it’s definitely not the case when it comes to trading.

Devoting years to a discipline like law or medicine, or building space rockets, sure, will increase your earning prowess.

But in trading, really?

All you need is one simple system.

And more importantly, the discipline to follow it.

Period.

 

So much time so little to show for it

My quantum leap in trading came when I stepped away from it and stopped caring.

Yes, you read that correctly.

I stopped caring because I  got bored of losing. I got tired of beating up on myself up for my consistently crap results.

I’d become obsessed with the markets, which led to severe over-trading.

And it took a toll on my finances, relationships and health.

One day I realised, ‘shit this trading thing ain’t working for me, and I don’t even have any marketable skills to find a decent job’.

I’d become so sidetracked on my quest to be a trader, nearly a full decade had passed me by with precious little to show for it.

It was all pretty sad actually. And over time this thought really started eating away at my soul.

So I forced myself into action.

Chose some areas I was both interested in, but also had value in the job market.

I learned WordPress, some graphic design. I improved my long-dormant writing interest.

I worked on my foreign languages and a few other interesting areas, none of which were remotely anything to do with trading.

And what happened as a result?

My f&%&ing trading improved that’s what!!

I wasn’t overtrading.

I didn’t feel I needed winners so desperately.

There were new income streams on the horizon. All previous self-imposed pressure started to subside.

I felt better about me. And when I felt better about me, the end result was better trading.

This was still years before Tradeneophytes was born.

Each year I’d try to start a blog,  but always gave up due to procrastination, perfectionism or a combination of both.

It also troubled me writing about the markets, when I was still pretty much an amateur.

I didn’t want to be considered a fraud.

I got a whole new set of problems, but none of them involved me losing money.

 

Beat Over-Trading

 

How to beat over-trading for good

If there’s one take away from this blog its that in trading less is often more.

The only people who gain from too much trading are the brokers, introducing brokers and system vendors.

You’ll be sold on one system and when it produces its first loss, you’ll be back for more hopium.

It’s an endless cycle, of elation at finding the one and despair when the one turns out to be as flawed as the previous one.

All the while your market knowledge is growing exponentially whilst your ability to trade is falling off a cliff edge.

The only sustainable way I found to stop all this was to develop other interests or income streams outside of the markets.

Our need to trade so often comes from a need to escape our current lifestyle or financial situation.

We choose trading over other income making opportunities because trading is a great business.

But in the same way, you can develop oneitis for someone of the opposite sex, you can also develop oneitis for trading as your primary income stream.

If you’ve ever had oneitis, then you know that the harder you chase the object of your desire the further away they run.

The same happens in trading, the more chasing for profits you do, the more those profits slip through your fingers.

For me, the answer was to develop a few new career and business skills.

And slowly my obsession for markets was replaced with an obsession to improve in as many areas of my life I could.

For you, it could be something else.

Maybe your job skills are up to date.

Then go work on your golf swing instead. Or your abdominals.

Go start some new hobby you always wanted to.

Set up an online business.So what if it fails? You’ve distracted yourself from over-trading.

By doing all this, you’ll unconsciously solve many of the psychological problems holding back your trading results.

 

What if all you want to do is trade?

Ok, you don’t want to work on your golf swing.

You don’t want six-pack abs.

You don’t want to start an Amazon FBA business, or any other online business (they all promise so much but deliver so little).

All you ever wanna do is trade.

Fine. I get it.

Then try learning to code python. It’s one of the hottest skills out there. And totally transferable to trading.

Start reading company balance sheets and accounting.

You’re going to need that skillset if you want to work at Goldman Sachs anyway

Why not do an economics degree? Then you can talk the same shite central bankers do.

Or learn stats. Or Excel or VBA.

There are so many avenues outside of trading, that are transferable skills in the domain of trading.

Choose one, and use it as the crutch to beat over-trading

 

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John Scott
John Scott has been trading CFDs and FX since 2003. His favourite markets are the Dow 30, Gold and the GBP/USD. John believes short-term price action trading is the best approach for beginners to trade. Tradeneophytes is his humble attempt at helping new traders reduce the learning curve to trading success.
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G Ryan
G Ryan
6 months ago

I was worry free during the 2008 bear market when someone else managed my brokerage account. Now it’s constant worry and checking. Thank goodness for your articles… It’s a great thing you are doing.