Overtrading

A lot of apprentices gradually realise they have been overtrading. Private investors trade about 5-10 more than professional traders over the same time frame.

Here is a great question from an apprentice:

Question

My problem is always over trading so I believe the only way I will achieve targets is if I stick to the following rules:

1. Stop Trading after profits are taken from a trade and not to trade again that day to avoid over trading

2. If the weekly or monthly target has been achieved, stop trading for that period

3. Stop trading on as soon as a loss of 1.5% is recorded for any particular day and only return the following day

Although this is not dissimilar to your teachings, sometimes it helps to think out loud. With that in mind, do you think this is a good philosophy for me to adopt?

Answer

Perfect. These are the kinds of bespoke rules to suit your personality that work well. In my book, The Mind of a Trader, the Chairman of the world's largest exchange tells me about how even new professionals would overtrade out of confidence, pessimism, boredom!