Why do we over-trade?


Frustrating isn’t it? Not being able to stop yourself looking for more trades.

Addictive isn’t it? Watching and waiting for the next good signal that could mean massive profits?

Soul destroying when you know you shouldn’t be doing it. Even more so when you make a bigger loss than if you’d just stopped trading for the day.

So why do you do it?

There are lots of reasons. Here are some of them:

  • Lacking direction
  • Enjoying the rollercoaster
  • Unable to accept failure
  • Constantly trying to disprove internal image
  • Feeling desperate
  • Implied pressure

Let’s break these down a bit. You’ll have already spotted that some may overlap.

Lacking Direction

This is all about not having goals. Or not having appropriate goals. So if you have no goals at all, you have nothing to work towards, nothing to help you control that behaviour or guide when you have achieved what you want to have achieved. Equally, if your goals are too tight, that can cause you to feel confused. For example, it is unrealistic to expect profit every trade, and if you do, then you lose a trade, this will make you want to ‘fix’ the problem. You can see how the direction faulters or disappears at this point.

Enjoying the rollercoaster

You may not want to admit it, but this may resonate with you even just a little. Some people just like the chase. They get such a thrill from spotting the next potential winner… this is dangerous territory really and something you need to work out. Promiscuity when trading can lead to you becoming a ‘trade addict’. For others, its not about being addicted, it’s just the buzz of one profitable trade leads them to find the next buzz and so another trade is sought out etc etc

Unable to accept failure

For some traders, they just don’t know when to walk away. If they’ve lost a trade or not done as well as they’d liked, then that is ‘not good enough’ and so they want to carry on until they believe they have achieved what they set out to.

Constantly trying to disprove internal image

This one is complex so I won’t go to indepth for you here. But essentially, we all have our internal view of ourself. For some of us it is a positive internal image, and for others, it is negative. For example, believing one isn’t good enough or does not deserve success. But with trading, you want to be a trader and so that doesn’t match with ‘not feeling good enough’ and so if you have a losing trade, that reiterates your lack of self-belief, you may try hard to disprove that by over trading.

Feeling desperate

Sometimes, overtrading can be due to external factors. Debt, bills to pay, proving yourself to someone else etc etc. It can lead you to continue trading when you shouldn’t.

Implied pressure

You can see that this could easily be linked with some of the other factors. But we are so brilliant, as human beings, at putting pressure on ourselves to perform. No-one else can put this upon us. This pressure could be linked to a faulty goal, poor self-esteem and many other factors.

Trading not to lose

This is actually quite common. You have an acceptable level of profit you want to make and can happily stop trading that day when it’s met. But because you are incurring losses, you keep trading in a desperate attempt to minimise loss, break even, or even better go back in to profit.
What are the actual advantages and disadvantages of over-trading?

HAHAHA I can already hear you thinking ‘advatanges? What does she mean?’

For every negative behaviour out there, there is a positive intention. How is it benefiting you to overtrade? Is it hope? Is it keeping up your self image? Is it proving to yourself that you can achieve your dreams?

What are the disadvantages? Write all of this down, really drill down into it. This can help you start to address the challenge that you face.


I have some good news for you!

You can stop over-trading! Your brain is a superpower. Humans are seriously advanced and seriously clever. It is your cleverness and your brain wanting to solve a problem, that has caused overtrading in the first place. Your brain can fix this too! Keep your eyes peeled because in the next few weeks I am going to be telling you how you can fix this!


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