Stock Trading Tips - How to Avoid Over Trading Stocks
December 21, 2008
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.
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Hey, Really is it easy to make money? I am planning to invest money in stock market but I don’t know which is proper way to invest and after that is there any chance to get profit in stock market.
Hello..I am new to this site and am just starting to learn to trade… I am looking for opinions on the best trading books… I have read Robert Dorfman’s Hedge Fund Trading Secrets Revealed, which was fantastic,..I learned so much…. Jim Cramers’s Confessions of a Street Addict..(written before he got super famous) and Richard Arms’ Stop and Make Money: How To Profit in the Stock Market Using Volume and Stop Orders. All 3 are riveting and very informative and gave me info on how all this stuff works… Anyone have other recommendations?
Hi Milt, thanks for posting a question. First, let me say that I’ve never actually read a book on trading. I have read hundreds of articles via the internet but most of my learning experience came through trial and error. If you’re just starting out or are wanting to learn how to trade, you need to ask yourself a few questions.
What is your investment/trading goals?
Are you going to be able to sit in front of the computer all day?
Are you entering a trade for quick profits or a long term investment?
Are you good a handling stress and dealing with pressure?
Reading books and trying to learn is always a good thing, but you need to narrow your learning efforts towards what type of trading you want to do, especially if you’re just starting out. I always tried to make trading as simple as possible. If you overload your brain with too much info, it will hinder your ability to execute profitable trades.
My best advice to you would be to sign up with an online broker that allows you to trade using a simulated account. This way you can practice trade without the fear of losing real money. This will also allow you to get a feel for what you’re dealing with and will shed some light on what type of trading best suits you.
If you have any questions at all, don’t hesitate to ask.
The process of avoiding over trading stocks is good and also helping. This is a good explanation to win and also gain success in the stock market. Stock market is also like gambling, because every thing depend on the time and luck.
Mike thanks for the advice..UPDATE…. I am swing trading with real money using Scotterade… I used some of Arms and Dorfmans ideas and made some money in Jan… and so far in Feb I am up 3%!
hi
This is a wonderful opinion. The things mentioned are unanimous and needs to be appreciated by everyone.
Helen
General Comment
Virtual Currency
The things mentioned are unanimous and needs to be appreciated