Stock Trading Tips - How to Avoid Over Trading Stocks

Over Trading Stocks

Over trading stocks is something that I have trouble keeping under control and I’ve been trading online for ten years.  I’ve lost count when it comes to the number of times I have missed a winning trade, let my emotions take over, then placed a few more trades with the thinking of making up for the first missed trade and then ending the day with a loss. 

When this happens to me, it’s a loud wake up call that I need to make some changes.  It’s also easy to recognize where and why you made the mistake of over trading, but that’s usually after the mistake has been made.

How to Prevent Over Trading Stocks

The best way that I’ve found to avoid over trading is by religiously sticking with a game plan, one where you only follow a small list of potential trades.  Do your research and locate a few stocks that look solid and have the possibility of being a profitable trade, then stick with them. 

You should never increase your odds of having a losing trade by blindly executing a trade on a stock where you have done zero research or by simply trading that stock just because it’s moving higher.

Stock Market Research

It’s not about quantity, it’s about quality; this saying clearly applies when trading stocks.  Each trader is different when it comes to their ability to follow a certain amount of stocks on a watch list.  I’ve found that if I limit my main list to 5-10 stocks it greatly increases my chances of executing a profitable trade due to the fact that I remain focused. 

Then later, if the market is down or the trading action slows for an extended period of time, I can then look at a second tier list of potential plays that didn’t make my main list.

Stock Trading Plan

Another tip to avoid over trading is to consistently remind yourself of your stock trading plan. Ask yourself what your trading strategy is and be aware of how much money you have in your trading account.

If you plan on entering a trade with the intention of exiting for a quick profit or a small loss, the amount of trades you execute will be more than someone who plans to hold a trade as a long term investment.  If you’re trading or investing with a small amount of money you should never consider placing several trades during a short period of time.

Consistency and Patience are Key

There isn’t a trader or investor alive that doesn’t execute trades that end with a loss or miss trades that display huge gains. 

Remember the key to avoiding over trading is sticking with your game plan and focusing on a smaller list of potential plays.  Keep in mind that there will be days and sometimes weeks where none of your potential plays reach their entry spot.  When this happens, it’s best to sit on the sidelines and remain patient.