It’s been a while since I reviewed the beautiful truth of less is more. Nowhere is that truer than in generating trading profits. Previously I recommended option trading as the perfect means to address this issue and reduce overtrading. Options help by precisely knowing your total risk when entering any trade.
By reducing the number of different equities you are trading to a handful or less, your attention remains focused. By focusing on less positions with larger size financial capital allocated to a few trades your profits can really rocket higher. Right now, in my trading account I have just three trades on. My profits have never been higher.
One of the categories I manage in my trade tracker is my annual trading expenses from option contract expenses and fees. I have for a number of years gradually reduced them all while increasing my annual profits.
When you trade for a living there is a tendency to treat trading as a job. Nothing could be more damaging. Expecting a paycheck daily from trading is what causes overtrading. You feel you need to produce because you or a loved one expects you to produce consistent income. You then force trades as you can only make a profit if you have trades on. This explains why 85-90 % of day traders consistently lose money. Pressing does not work in trading. It is like no other job you have ever had.
Great trading is like being on a safari hunt for big game. You wait and wait and wait for just the right time until the big one you have been waiting for arrives. Rushing into a trade or chasing will likely get you into something you only want to get out of in short order.
I attended a real estate seminar years ago where the presenter kept saying the less I do the more I make. He liked to delegate everything and focus just on making deals, which is what he was good at. I transformed his axiom and made it my own for trading, which is what I am good at.
THE LESS I TRADE THE MORE I MAKE
It is easy to get sucked into the quagmire of excessive trading. Somehow something looks like you should buy it every day, sometimes every hour. If your in a trading group the pressure is on to trade more. Your broker wants you to trade more. But only you can control this insatiable desire to enter more and more trades.
By repeating my mantra or pasting it on your monitor you may be able to halt overtrading and stick to the safari hunting strategy of waiting for trading alerts you set for the Big One that can really pay off.
Enuf said.