In today’s article, we are going to understand the 3 Points to Know about Quantity Vs Quality of Trades. Many amateur traders just want to trade but they fail to understand that the quality of trades is 1000 times more important than the number of trades you take. This problem occurs because they want to catch every move in the market, and they fail to understand that the markets are going to be there tomorrow, the next day, and 10, 20, 100 years into the future. Today is not the last day for you to trade. But unfortunately, many people trade with the same mindset.
As we say, history repeats itself, in the same way, everything in the market will repeat and markets will give you the chance to make money. But for that, you have to stay in the market for a longer time. Over-trading is the only thing that will throw you out of the market. If you stay disciplined and stay in the market for a long time then your chances of becoming a profitable trader automatically increase.
I often get this question, and the answer to this question is quite simple. If you find yourself trading in all the market hours, then probably you are overtrading. If you are taking more than one trade at a time, and if you have not calculated risk per trade properly, then probably you are over-trading because of your emotions.
There are a lot of examples of overtrading but, the thing here to understand is the loss that may occur due to overtrading can be far more than what you can afford to lose. Here are some of the adverse effects of overtrading-
Trading edge is the most important thing when it comes to trading as it plays a significant role in the profitability of the trader. Trading edge increases the chances of profitability of the trader if he trades with a particular system.
But the fact is the more trades you take, the more diluted your trading edge becomes. If you take more trades that are not meeting your system criteria, then you will automatically face more losses, and your trading edge won’t work because of over-trading.
There is a difference between market noise and a 5-star trading setup. If you analyze market noise and trade based on that noise, then you are going to end up losing your money. If you have a trading edge and if you trade with a system, only then and then you can know what is the 5-star or high probability trading system. So, the point here to understand is before risking your hard-earned money, make sure to develop your trading edge and avoid over-trading so that you will not dilute your trading edge.
Whether you make money or not, brokers and the government always make money whenever you trade. You need to understand that the more you trade, the more money brokers and governments make. That is why it is important to trade less and only take high probability trades.
If you take a look at most endeavours, trading included, often doing them too much, or performing a certain activity too much has a direct, and negative impact on how well you perform that particular thing. That is why you should avoid over-trading.
Addiction to anything is bad. If you closely observe smartphones, drugs, online games, alcohol consumption or trading, all these things have one characteristic in common. They all are addictive.
If you can’t control yourself during trading and trade based on emotions, then trading becomes addictive, and you will eventually end up losing all the money. This occurs because while trading, you are just one or two clicks away from placing the trade order, and if you get profit from your 1st few trades, then your brain releases dopamine chemical which makes you happy, and to get that pleasure, you again trade with more risk.
Up to this, we have understood how over-trading can harm your account. Now, we will discuss some of the most effective solutions upon focusing on the quality of trades and limit over-trading.
This is the most simple and effective solution to stop over-trading. Now, apply it like this- Make your trading plan. Take only the best trades and after taking those trades, if, unfortunately, your 2 stop-losses get hit then, close your day.
When it comes to trade frequency, it is important to say “If I get the two stop-losses then I will not trade further on that day.” If you get two stop-losses in a day, then close your laptop and don’t look for the trades again. This solution will definitely save you from over-trading.
Many traders trade whenever they see an opportunity, and that is why they end up losing. Remember, whenever you trade, you don’t have to take the first opportunity. You have to take the best opportunity.
Now, the question that arises is How to Identify the Best Opportunity? Here the role of filters comes in. You have to set specific filters to your trading system, and before taking every trade, you need to check whether that particular trade is fulfilling all the conditions or at least the important conditions.
After doing this, you will come to know exactly what type of trading setup suits you. One important thing to remember here is you will not get perfect setups daily, and if you are getting those, then probably your trading system is analysing the market noise. So, by taking only high probability trades, you can grow your trading accounts, and also, prevent over-trading.
The truth of trading is you will not get perfect trading setups every day. That is why you have to manage the risk of your capital every single time when you trade. One of the important reasons to take a trade on high probability is it improves your trading edge and stops you from over-trading.
In my Booming Bulls Elite Trader Mentorship Program, I train my students to Identify High Probability Trades with Good Risk Management Techniques. In order to identify a high probability trading setup, you first need to develop your trading skills. With the help of my Mentorship Program, I will be helping you to improve your trading skills.
I hope in today’s article I was able to explain to you that Why is the Quality of Trades is 1000 Times More Important than their Quantity. If you have any doubts regarding this, please post them in the comment section.
If you want to know more about Risk Management & Intraday Trading Strategies you can refer to our previous blog on
Importance Of Risk Management In Trading and 10 Best Intraday Trading Strategies.
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best information , thanks
Thank you, Himanshu, glad that you find the blog helpful. We constantly try to bring helpful blogs for our traders and will continue doing so.
its very important post to develop trading skills, choose best quality trade and best setup.
best information thanks
Thank you, Jay, glad that you find the blog helpful. We constantly try to bring helpful blogs for our traders and will continue doing so.
Thank you, Rahul, glad that you find the blog helpful. We constantly try to bring helpful blogs for our traders and will continue doing so.