This is a trick question which is why this is such a common hard-to-overcome problem. Overtrading is NOT homogenous. There are many different causes of overtrading, which is why there is NO SINGLE SOLUTION. You NEED TO IDENTIFY YOUR PERSONAL ISSUE AND ATTACK THE ROOT CAUSE.
OVERTRADING DUE TO BOREDOM? Create a list of busy work and projects to do. Go for a walk or do trade write-ups. This is the simplest case and not that common. One of the worst is probably…
OVERTRADING TO PROVE YOU ARE RIGHT AND SMART: Often, these traders are opinionated and stubborn with their views. They care more about the market agreeing with them than making money. They lack a clear playbook but churn it until “proven right.” The trader needs to divorce themself from this view of trading.
OVERTRADING DUE TO NO DEFINED PLAYBOOK: The trader doesn’t know his true setups. He doesn’t know his entries or exits, so he is haphazardly attacking or getting involved. He doesn’t wait for a specific setup or even have one. The solution is, of course, to develop a defined playbook.
OVERTRADING DUE TO FOMO: Stock is moving without you or other traders making money, so you may feel the need to get involved. The trader needs to dissect why they compare themselves to others, create a system to prevent FOMO, and train yourself to accept that stocks can move without us in it. Our job is to trade setups.
Yes, I am simplifying. Many more reasons and fixing causes can be complicated. It needs lots of brainstorming to solve. But the main point is that there are different CAUSES for overtrading. YOU CAN NEVER FIX IT UNLESS YOU IDENTIFY YOUR TRIGGERS APPROPRIATELY AND ATTACK FROM A PROPER ANGLE.
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