Over trading is perhaps the most prevalent and damaging mistake that forex traders make. The problem with over trading is that it amplifies anything else you are doing wrong in the market, and it typically is either the cause of other emotional trading mistakes or a result of them. For example, if you are over trading you are likely to end up risking too much per trade and blow out your trading account. If you are over trading and not using stop losses you will also quickly blow out your trading account. If you do not have a plan for taking profits you will eventually over trade out of frustration of not having taken a decent profit, and you will then blow out your account soon after. Trading off of 1 hour charts and lower time frames is a sure-fire way to induce over trading and thus blow out your trading account. Over trading is a very easy mistake to fall prey to, yet it is also possibly the most damaging, thus the difficulty that most traders face when trying to become consistently profitable.

The only real solution to over trading is patience. You must have the patience to wait for a quality price action setup to form at a confluent level in the market and preferably with the dominant trend. Most novice traders over analyze the charts and begin to look at 1 hour time frames and lower which are inherently less reliable than 4 hour charts and above, this causes them to think they are seeing a quality signal when really all they are seeing is regular market “noise”. Stick to 4 hour charts and above when first starting to trade and be EXTREMELY picky in what price action setups you trade, this should at least partially fix your over trading problems.

Risking too much per trade seems like a rather easy mistake to make sure you don’t commit, however, it is a very common mistake that many novice traders make at some point. The problem arises when you think you have a setup that looks like it just cannot fail, you then decide to double-up your normal amount of risk, the trade goes against you and you then lose a rather large percent of your account very quickly. This induces over-trading, because you feel an urge to “get your money back”, which inevitably leads to more losses, and the eventual loss of your entire trading account.

Traders who get lucky and hit a couple big winners while risking too much are at particular risk to blowing out their accounts quickly because they are riding an emotional high of making a lot of money really fast and have also psychologically rewarded themselves for risking too much money, they then begin to over trade while risking too much and it will then only be a matter of time before this cycle of getting lucky while risking too much comes back to bite them in the form of a devastatingly huge loss. Learn correct forex money management techniques to make sure you don’t risk too much per trade and you can essentially kill two birds with one stone by making sure you don’t end up over-trading as a result of mis-managing your money.