Investing - Poorly thought-out trade
The line between too much trading and normal market activity may be thin; in this article we will present you with a few key situations in which you can recognize your behaviours:
- You have many open positions and often change your mind about them; for example, you purchase in the morning, but change your mind without a specific reason in the afternoon.
- You conclude “blind” transactions - here you are buying at a high level of support, there you are selling due to analytical recommendations, and in the meantime you are following Twitter and opening several small positions.
- Your account funds suffer losses – this is another confirmation that you trade too frequently, because hesitating or changing the situation damages your profitability.
One way to stop and analyse the amount and frequency of your transactions is to withdraw from the market for some time: leave early for the weekend, take a week off from trading. Do anything you can to delay your entry into the next transaction. If this does not help, reduce the risk and expand the scope of defence orders (e.g., stop-loss). Consider also appropriate balancing of positions to avoid emotional attachment to any specific transaction.