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What is over-trading?

  • #21
  • Apr 12, 2010 11:06pm Apr 12, 2010 11:06pm
Quoting Mr J

Not true. Let's say I create a system where I buy on an uptick, sell on a downtick. I might be following my system, but I'm also sure as hell overtrading. Extreme example, the same could be applied to any system, to a lesser extent.
Actually...what it means is that you have a bad system.
  • #22
  • Apr 12, 2010 11:36pm Apr 12, 2010 11:36pm
Quoting Craig
That has to be the stupidest counter example in the history of the Internet.

Let's say I create a car where the brakes are automatically applied every 10 meters, I'm driving the car properly, but I'm sure as hell stopping a lot!
I think you're missing the point. The poster made a statement that there is never overtrading if one sticks to a system, and I was simply refuting that statement. My point related to your example would be that that there is too much braking, just as in my example there is too much trading within the "system". The silliness of the example isn't relevant as long as it illustrates the point.

Quote
Actually...what it means is that you have a bad system.
Are you suggesting that overtrading and bad systems are mutually exclusive? If not, then what is your point?
  • #23
  • Apr 13, 2010 12:22am Apr 13, 2010 12:22am
I did state my definition of overtrading: the point at which additional trades are not beneficial. What do I mean by not beneficial? The additional trades either do not have positive expectancy, or they harm overall performance (i.e. they may profitable, but at the expense of profit on other trades).

Quote
I think the guy who said that was assuming a valid system for the sake of discussion

Likely, but overtrading can exist within a profitable system. Like I said previously, none of us are trading optimally, and therefore we are all undertrading or overtrading. Furthermore, overtrading isn't necessarily a bad thing. I said before that I'd prefer to slightly overtrade than significantly undertrade. The latter has me leaving a lot of money on the table, while the former has me taking advantage of many more opportunities at slightly lower efficiency.
  • #24
  • Apr 13, 2010 12:40am Apr 13, 2010 12:40am
there is nothing like over-trading as long as i am making profit.
Allow the Market to get to your target entry...
  • #25
  • Apr 13, 2010 1:20am Apr 13, 2010 1:20am
overtrading is:

Putting on trades outside your rules / trading plan

Putting on more trades than you can effectively manage

Scalping in and out of the market when holding a trade would have produced better profit (ie feeding the broker with pip spread !)
  • #26
  • Apr 13, 2010 9:59am Apr 13, 2010 9:59am
Quoting ForexQuant
If your trading plan requires you to trade 100 times per day but you only make 50 trades, then you are under-trading.

if your trading plan only need you to trade 1 time per week but you trade 1 time per day then you are over-trading.
Why would a plan require you to trade a number of times?

There no such thing as overtrading, there is trading without a clear strategy that is measured and you have confidence in.
Economists have forecast 9 out of the last 5 recessions
  • #27
  • Apr 13, 2010 12:12pm Apr 13, 2010 12:12pm
Quoting markmm
Why would a plan require you to trade a number of times?

There no such thing as overtrading, there is trading without a clear strategy that is measured and you have confidence in.
Portfolio management plan.
  • #28
  • Last Post: Apr 13, 2010 12:29pm Apr 13, 2010 12:29pm
Quoting Trad3r
If you make 100 trades per day, with a minimum of 2 pips of spread/comission at open a trade plus 2 pips at close: 4 pips per trade * 100 trades = 400 pips!!!

You lose 400 pips per day only for trade! What method gives you more than 400 pips at day? HAHA If your method make 100 trades per day the only benefited is your broker.

I consider that to give 4*5=20 pips per day to your broker is enough, if I could get 20 pips at day I would be rich!
Hey, smarty pants. You only pay the spread once.

You're welcome.
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