New book by Larry Connors Click here Improve your trading - See how
| TradingMarkets.com
One of the common themes of successful traders is that they are patient and wait for high probability set-ups to occur. Then they take advantage of those set-ups.
Many aspiring traders don't reach professional levels because they overtrade. They feel the more they trade, the more chances they will have to make money. This is incorrect.
Here are the following three ways to diagnose whether or not you're overtrading. Here's what non-successful traders do and you want to make sure you're not one of them
They're looking for action. Meaning instead of following a high probability trading methodology, they're taking trades on hunches with no statistical edges.
They subscribe to multiple newsletters (most without written, fully disclosed, track records) and they are at the same time watching the business channels looking for hot ideas. How is this any different than going to a racetrack and buying all the tout selections and also asking strangers "who they like"?
They trade for the rush. The more trades they do the better they feel. Behavioral psychologists refer to this as compulsive behavior and it's a serious weakness in any profession or activity.
The good news is that traders like this have existed since the beginning of the markets and will be there forever. They often provide the high probability opportunities by emotionally reacting to prices, allowing markets to become even more overbought and oversold and providing the edges for those who are on the other side of the trade.
If you see yourself doing any of the above, learn to stop by keeping a journal which allows you to constantly monitor and reflect upon your behavior in order to change it. And if you are solid with your discipline and the above is not an issue, you're in the very good position to take advantage of the many traders who do overtrade.
Special Note - Our High Probability ETF Trading book is now released (along with some excellent early reviews). If you haven't ordered your copy yet you can do so by clicking here. The first printing has sold very quickly and we're down to the last 800 copies until the next printing comes in. To guarantee immediate delivery, click here.
Larry Connors is CEO and Founder of TradingMarkets.com and Connors Research.
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The Connors Group, Inc. ("Company") is not an investment advisory service, nor a registered investment advisor or broker-dealer and does not purport to tell or suggest which securities or currencies customers should buy or sell for themselves. The analysts and employees or affiliates of Company may hold positions in the stocks, currencies or industries discussed here. You understand and acknowledge that there is a very high degree of risk involved in trading securities and/or currencies. The Company, the authors, the publisher, and all affiliates of Company assume no responsibility or liability for your trading and investment results. Factual statements on the Company's website, or in its publications, are made as of the date stated and are subject to change without notice.
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HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING AND MAY NOT BE IMPACTED BY BROKERAGE AND OTHER SLIPPAGE FEES. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.
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