What overtrading looks like
It is when you keep taking more trades, even though your own conditions are not met. Common signs:
- You take more trades than you planned
- The gap between closing one trade and opening the next gets shorter
- You think of the reason for a trade after you have entered (an unplanned entry)
- Your trade count goes up right after a loss, or when you are bored
Some strategies take many trades, and it is natural to trade more on days when the market moves a lot. What matters is whether you are trading more than your own plan or conditions allow.
How to notice, by counting
Numbers are easier to notice than feelings. Start with just two: trades per day, and unplanned entries. Once that feels easy, add the other two.
1. Trades per day
Compare with the number you planned. If you have not set one, just counting is a good start.
2. Unplanned entries
Before each trade, ask yourself: “Is this a setup I planned?” Count the trades where the answer was no.
3. The gap between closing a trade and opening the next
When the gap is shorter than usual, you may be entering without checking your conditions.
4. What was happening when the count went up
Right after a loss? A slow, boring market? When you were tired? You will start to see a pattern.
- Trades today: X (my limit: X)
- Unplanned entries: X
- Shortest gap between trades: X minutes
- The count went up: after a loss / when bored / when tired, and so on
What to decide in advance
Once counting shows you a pattern, write your rules in this format. It makes decisions easier in the moment.
- If my trade count today reaches my limit → no new trades
- If I just closed a trade → no new trade for the time I set
- If the answer to “Is this a setup I planned?” is no → I skip it
As an example only, a rule might look like “up to 3 trades a day” or “no new trade for 15 minutes after closing one”. These are not recommended numbers. Set yours from your own strategy and the counts you recorded.
If you set a maximum number of trades per day in the daily trading tracker, it shows a message when you get close to it and when you reach it. If your count goes up after losses, see How to stop revenge trading.
More trades, more costs
You pay the spread, and any commission, on every trade. For example, trading 0.1 lots of EUR/USD with a 1-pip spread costs about 1 USD per trade in a USD account. If each trade costs 1 (in your account currency):
- 3 trades a day × 20 days = 60 trades → total cost: 60
- 10 trades a day × 20 days = 200 trades → total cost: 200
- 20 trades a day × 20 days = 400 trades → total cost: 400
Even a small cost per trade adds up as the count grows, and the smaller the account, the bigger that cost is compared with your balance. FINRA, a US self-regulatory organization for brokers, warns that frequent trading means higher costs, which can reduce your returns.[5]
To see your own spread cost per trade, enter your lot size, and enter the spread (in pips) as the move, in the pip value calculator (commission is not included). For gold, the spread is often shown as a price difference in USD rather than pips, and brokers count it differently. If you hold trades overnight, you may pay (or receive) swap; some accounts have no swap.
What research shows (briefly)
- US individual stock accounts (1991–96, about 66,000 households): the fifth of households that traded most earned 11.4% a year after costs, against 17.9% for the market (before costs, households that traded most and least both earned about 18.5–18.7%).[1]
- Brazil index futures: of the individuals who started day trading in 2013–15 and kept going for at least 300 days, 97% lost money (a study released as a working paper).[2]
- India equity futures and options: 93% of individuals who traded in the three years from April 2021 to March 2024 (FY22–FY24) lost money, according to India’s securities regulator, SEBI.[3]
- Europe CFDs: national regulators’ analyses found that 74–89% of retail accounts lost money (2018).[4]
These cover different countries, products and years, and may not apply in the same way to retail forex. The second to fourth points also do not look at how trade count relates to losses. What they do suggest is that trading more is not a shortcut to better results.
If losses are weighing on you, or you find it hard to stop even when you want to, you do not have to deal with it alone. Many countries and regions have support services for money worries or compulsive behavior.
Sources
- Barber, B. M., & Odean, T. (2000). Trading Is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. The Journal of Finance, 55(2), 773–806. https://doi.org/10.1111/0022-1082.00226
- Chague, F., De-Losso, R., & Giovannetti, B. (2019). Day Trading for a Living? Working paper. https://ideas.repec.org/p/spa/wpaper/2019wpecon47.html
- Securities and Exchange Board of India (SEBI). Press Release No. 37/2024 (September 23, 2024). SEBI press release
- European Securities and Markets Authority (ESMA). ESMA agrees to prohibit binary options and restrict CFDs to protect retail investors (March 27, 2018). https://www.esma.europa.eu/node/84933
- FINRA. Frequent Intraday Trading: Understanding the Basics. https://www.finra.org/investors/investing/investment-products/stocks/day-trading