Meet Jason. Jason had been trading forex for eight months. He was no expert, but he wasn’t a rookie either. Most days, he’d come out slightly ahead, until those days when things spiralled.

It always started the same way. Jason would have a solid morning, maybe catch 70 – 80 pips on a major currency pair.

But if the market turned and he lost more than 40% of those gains, something in him snapped. He couldn’t walk away. Trade after trade, he chased the market, trying to claw back what he’d lost.

By the time he hit a 60% drawdown, regret kicked in. But it was too late. Jason had fallen into the trap of overtrading again!

Sound familiar?

What Is Overtrading? (And Why Do Traders Do It?)

Overtrading happens when you take too many trades, too quickly, often driven by emotion rather than strategy. Common causes include:

1. Revenge Trading

Trying to recover losses immediately by taking impulsive trades. Taking a $30 loss from your trade is better than going gungho in the follow-up trade to compensate for the $30. You might end up with more losses (like Jason).

2. FOMO (Fear of Missing Out)

Jumping into trades just because the market is moving, even if your strategy doesn’t support it. The M5 chart could have been bullish for the past 20 minutes, but it doesn’t mean the momentum will hold on when you enter the market.

Your strategy and insights should supersede whatever is happening on the chart.

3. No Trading Plan Or Discipline

You’re trading based on gut feelings instead of a clear system.

The result? Bigger losses, frustration, and blown accounts!

How The Brain Works In Overtrading Situations

Here’s the science behind what’s happening in your head when overtrading creeps in.

After a profitable trade, your brain gets a hit of dopamine, the feel-good chemical that drives motivation. Pair that with adrenaline from taking risks, and suddenly trading starts to feel rewarding in itself.

Over time, your brain starts to chase that high, nudging you to keep going with whispers of ‘just one more’.

On the flip side, losses trigger fear, frustration, and even anger. Your brain wants to fix the discomfort and pushes you to keep trading until you ‘feel better.’ But in that emotional loop, structure breaks down. You start ignoring rules and justifying impulsive decisions.

When emotions take the wheel, trading discipline goes out the window. That’s where things unravel.

4 Red Flags Of Overtrading

1. You’re Trading Just To ‘Be In The Market‘

If you’re placing trades just because you feel you should be trading (even when setups are weak), you’re likely overtrading.

2. Your Losses Are Growing Faster Than Usual

One bad trade leads to another, and suddenly, your daily loss limit is gone. Sound like Jason?

3. You’re Ignoring Your Trading Plan

Skipping analysis, changing stop-losses at the last minute, or abandoning risk management? That’s overtrading in action.

4. Multiple Trades At Once

How would you know if your trading practice runs on the mantra of quantity over quality?

It’s when you discover a high volume of trades in a day or session. A vicious cycle of wins and losses in a short timeframe can inadvertently cause overtrading without realising it.

Remember our discussion on the brain’s role in the subtle whispering of ‘just one more’? That’s what’s happening here.

5 Tips to Avoid Overtrading

Here’s how to take back control and keep your trading disciplined:

1. Stick To Solid Risk Management

Use a risk/reward ratio that makes sense (eg 1:2 or better). Keep your lot size appropriate for your account size. Never risk more than you’re willing to lose.

2. Record Your Moves In A Trading Journal. Then Follow It Religiously

Your trading journal is your anchor. Include your entry/exit rules, risk limits, and daily trade cap. Don’t deviate. Treat it like a business, not a game.

3. Limit Your Daily Trades

Set a max number of trades per day (eg 3 – 5). This forces you to be selective and avoids burnout. Quantity doesn’t equal quality.

4. Walk Away at Your Loss Limit

If your losses hit your threshold, stop. Step away from the screen. There’s always another trading day. Protecting your capital is more important than ‘winning today.’

5. Don’t Take the Market Personally

The market isn’t out to get you. Sometimes setups fail. It’s not about you. It’s just price action. Keep your ego out of your trades.

Besides, imagine how chaotic the markets would be if they were hell bent on hunting down all the participants!

In Trading, Losing Is Normal. But Overtrading Is Not.

No one wins all the time. Losses are part of trading. It’s how you manage them that matters. Overtrading magnifies losses, clouds judgment, and destroys accounts.

If you feel yourself slipping, pause. Breathe. Review your trades and reset. The market will still be here tomorrow. Come back when your mindset is clear and your discipline is sharp.

Because in trading, staying in the game is the real win.

Open a live account with VT Markets to start trading. And remember – no impulse moves when you trade!