Definition – What does Overtrading mean?
Overtrading occurs when a forex trader deviates from the trading plan and begins to open and close positions based on emotions. Overtrading is usually caused by information overload or loss aversion. The best solution for overtrading is to stop the trading session and get away from the computer.
ForexTerms explains Overtrading
Overtrading isn’t measured by the number of trades made in a session. Instead, it refers to any trades that are made outside of the trading rules laid out in a trader’s plan. If a trader is profiting consistently by following the plan, then overtrading shouldn’t be a temptation. During periods of losses, however, a trader will be tempted to drop the plan in favor of trading from the gut. Overtrading usually leads to losses or – at the very best – inconsistent gains.
