Root Cause of Over-trading
What you feel about early moments of having a trade
You start every day determined to follow your trading plan with discipline.You truly believe this time will be different.You feel ready and prepared.Things go well for a while.Then something happens.
Suddenly you’re over-trading and taking trades you should never have taken.The worst part is that you don’t see it coming.Before you realize it, you’re already breaking your rules again.You don’t understand why you keep repeating the same bad habits over and over.
Root Causes Of Over-trading
Over-trading (different from revenge trading) comes from a strong bias toward taking action so the trader can make trades happen.Outside of trading, this strong tendency to take action often works well and helps people succeed.It feels so natural and correct that traders rarely notice this strong urge until losses have already occurred.Most traders do not realize that this same tendency is actually a poor strategy in trading.This urge is so common and normal in everyday life that it stays completely unnoticed—it is not even on the trader’s awareness radar.In the earlier example, the sudden urge to trade outside the plan feels like it comes from nowhere.But that is not how it really happens.The strong desire to take action and chase trades changes how the trader views the market situation.The trader does not see this change as something dangerous.He simply thinks: “I am here to trade, so I should start making trades and get active.”This thinking is incorrect.Over-trading is mainly caused by the fear of missing out on possible profits.This fear, when not controlled or addressed, seriously damages the trader’s thinking and decisions.The damage happens because the trader changes from patiently waiting for a good setup that matches his rules to actively searching for and forcing trades that do not match his rules.This small but important change in approach is what the trader in the example does not notice is affecting his perception and choices.
Acting quickly because you're bored, instead of waiting calmly
Sitting still and waiting can bring boredom to a mind that is used to staying active and doing something to make progress happen.For someone who prefers to be productive and take action, boredom feels like the opposite of achieving results.Making a trade, even briefly, removes the uncomfortable feeling of watching possible good trades (and potential profits) pass by while doing nothing.This strong but unnoticed urge to do something makes the trader more likely to act on sudden impulses instead of clear reasoning.It feels better to take some kind of action than to continue sitting and feeling increasingly bored as time goes on.Worse still, when you sit there doing nothing for a while, negative or restless thoughts often start to appear in your mind and create unease.This growing discomfort adds to the already strong desire to take action.Now the trader has two strong reasons to trade:
Wanting to catch an opportunity, and
Wanting to get rid of the uneasy feeling of just waiting.
These two forces together create very strong conditions that lead to over-trading.
