Trade What You See, Not What You Think Message Board

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Strategies & Market Trends : Trade What You See, Not What You Think

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To: Threei who wrote (738)	9/10/2001 7:58:42 PM
From: Apakhabar	of 867

I agree with your notes on overtrading. What I found not long after the introduction of decimals (which I initially liked) was that they lulled me into complacency which led to a bout of overtrading. Because my time frame is so short and I keep a very tight stop, I already had a feeling like "I can't get ruined. I can have losing trades, but I can't get wrecked." Nothing terribly wrong with this feeling, but with decimals I noticed in certain set-ups that I could increase the number of shares in a position and not (it seemed to me) increase my monetary risk too much because of the closeness of what I considered my my "get-out-here" bids (sometimes just pennies away) to my entry price. For me this was overtrading because carrying the additional shares didn't suit me (to be more accurate: I'm a shitty trader when I carry big positions). While I never blew up, I did note several instances of "getting frustrated" which led to spasms of share-reduction at inopportune times; my commissions and fees shot up and, in one month, ate up nearly all my profits. The number of trades has never been an issue for me and, IMO, it shouldn't be much of one considering my time frame. For me it's all about trading just 100-300 shares at a time so that I can always get out fast when the trade is not working or no longer working. Trading as I do really only requires that I pay per share commish instead of per trade. The only way I measure overtrading is by the number of shares I trade, because in my system, there just isn't the same type of opportunity once I approach, say, fifteen thousand shares a day. But the way I get to that number is rarely by making "too many" trades, but rather, by taking on too many shares.

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