Most people think that in trading, the more trades you make, the money more you will end up making.
But is this really true?
Traders who adopt this philosophy will constantly be chasing the next big shiny object, reading every piece of news online, and hunting for new opportunities every day.
The danger with this approach is that you stretch yourself too thin, which leads to decision fatigue. Even when the low-hanging fruit and easy opportunities are right in front of you, you might be too busy out hunting to see and seize those trading opportunities.
The allure of excessive trading attracts new traders, who want to make as many trades as possible, and get rich quickly in a short period of time.
Thus they are attracted to day-trading, even though intraday trading is only suitable for the most experienced and advanced traders. Most new traders would be much better of doing swing trading or position trading, where they can hone their skills in a less fast-paced and risky environment.
The advantages of trading less are numerous:
– allows you to focus on the best trades and best strategies
– helps you avoid bad trades and excessive trading
– makes trading less stressful
– do not need to constantly monitor the market
– less transactions means less transaction costs
Hence, for those traders who are making too many trades, it would be good to check your past trading records, and see if trading less might actually improve your trading results.
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If you would like to learn more about trading psychology, also check out: “The Complete Guide to Investing & Trading Psychology”
Spencer is an avid globetrotter who achieved financial freedom in his 20s, while trading & teaching across 70+ countries. As a former professional trader in private equity and proprietary funds, he has over 15 years of market experience, and has been featured on more than 20 occasions in the media.
