At what point you would say you are over-trading, Is it based on financial goals (say 2% capital appreciation in a month), number of trades(say 2 trades per day) etc.,
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over trading is when u force urself to trade. say u have 5 rules, but only 4 r met. there is an urge to still take the trade inspite of 1 rule not being met. this is when we call it an over trading scenario.
for some, 1 trade a month is normal, for some 5 trades a day is normal, so we really cannot classify in terms of number of trades.
similar thing with the capital appreciation, sometimes in a month, we may face loss also, that does not mean we under traded… its just that the market situation was such. sometimes, like before PM result, market was in an extremely bullish phase where ppl made more than normal, that does not mean they over traded. its just that the market condition was bullish, so ppl made money.
hope it helps.
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If the reason for taking the trades are greed and fear of missing money , instead of the set of rules you follow, then this is what called over trading.
Some scalping traders take roughly 20 to 40 trades in a day - but they won’t call it over trading because they are making money consistently and all these trades are generated by valid rules.
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It changes according to one’s style/stragey/rules/objective. As per my experience we do over trade when we get more profit/loss. In those situations we get carried away.
I personally learned that once your loss or draw down(from max profit to current value) exceeds certain parameter based on you risk tolerance you should realize you are out of your control and stop trading for that period(can be daily/weekly/monthly).
So fix the max loss from peak you are willing to take.
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I usually trade with USDINR and EURINR…I just want to trade for making 10 paise profit…This is my plan which needs big mind power to stop trading after making 10 paise…In my opinion, most traders lose money (including me) because we never stop and get out of computer…Whenever I make profit in the morning, I use to lose it and more in the wrong trade later…
I Have 3 strategies which generates around 20 trades a month raising 200+ Nifty points.
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good effort to xplain, Karunakumari. thanx
Welcome N 
Pavan, what is the max drawdown you keep? Also, do you track it on daily basis or on intra-day basis? Thanks.
I trade with around 40% of my capital and if I face a streak of losses of about 10% of my capital, I exit most of my positions.