Are you over trading?

Over trading is often mentioned as one of major mistakes in day trading.

Now I ask the question what is over trading in day trading context.

First of all I follow essentially a trend following system. Which means I must detect a trend before I trade.

Going over many days of nifty daily 5 min charts, I notice a pattern that most major trends last about an hour or an hour and a half. Sometimes a trend lasts through out the day.

Therefore, it would seem that on most days, I could aim to catch may be one major trend. This would mean one trade per day. If I allow for missed or misinterpreted trends, may be I should add 2-3 more trades.

Which means that I should not be placing more than 3-4 clean trades on any given day. I checked my trading record and discovered that typically any day I have traded more than 6 times I ended up losing money.

There you go, if you are putting more than 3/4/5 trades daily, you are probably guilty of over trading and are probably paying for it too.

If you have any comments please write to me at stockmarket.methods.in.madness@gmail.com