Over trading in forex trading is normally mentioned as one of the biggest mistakes traders make.

Some of the mistakes made by forex traders include: risking too much capital on the first day of trading, assuming you know how currencies are traded, trading just for the sake of it, and trading without knowing what is involved in the forex market.

But apart from the mentioned mistakes, there is one mistake, actually considered by experts as the biggest mistake any trader can make and that is to over trade in forex trading.

Over trading is the most frequent mistake that most traders make may be because they are so eager to make big money or because they are not sure of its complications.

There are underlying causes of over trading although it depends with every individual.

The underlying causes could be a sense of insecurity thereby looking for ways of making money very fast, the false idea that trading in forex markets brings about big returns within a short while, and unhealthy competitions among friends who want to try to beat each other.

Some traders who might be considered greedy are those who try to over trade. They actually put in their money in every trade that comes up without first analyzing it and knowing whether it is the perfect timing to place an order or not.

There are many dangers associated with over trading that if a trader keeps in mind, then they will be able to overcome the urge to over trade and they will place their orders wisely.

1. Lack of Emotional Control

Over trading in forex trading has been known to be both an emotional and psychological problem. Most traders who over trade do it in frustration after going through many losses that they could not manage.

So out of frustration they tend to trade more and more without looking at the rules of trade in a bid to catch up on lost time and money.

At times, those who over trade are people who feel over confident with themselves after realizing consistent profits so they start to over trade in a bid to make more only to lose in the end and break down.

Traders who experience bad calls in their trades or undergo massive losses become frustrated, angry, and most of the time panic hence over trading.

Without getting a grip of emotions, a trader exposes himself to more trade risks that would pile and cause more losses. To avoid such scenarios, a trader is expected to have a clear mind and know when and how to trade by not placing orders every time a chance comes up.

Also, those who lose are expected to be able to handle their losses maturely and forge ahead.

2. Improper Management of Funds

A good trader must possess the skills of money management. It is not all the time that the market will move in the direction that you have always wanted and these are the moments that call for great money management skills.

When things don’t go the right way most traders are tempted to invest huge amounts of money in every trade that comes up leading to over trading. This is dangerous because in forex trading, it is about wisdom and a little percentage of luck.

You might end up blowing your entire account without having anything to count for it. This is when depression sets in especially for the faint hearted and everyone knows what depression can do to an individual if not managed.

3. Loss of capital

Many traders open up many positions all at once in a bid to make a huge return on the initial capital. This is actually a dangerous venture that any trader can get into.

Many traders, especially the beginner traders, think that by opening many positions, they are sure to get huge returns within a short time. On the contrary, not all of them are lucky enough to get back their capital return.

Most of them think they might actually hit the jackpot in most if not all of the trades they bring up. But instead most of them end up with huge losses hence blowing up the capital.

Once someone gets back money that is nothing more than the initial capital invested, then that is a big loss made. To avoid this scenario, experts advise that a trader should go for little yet consistent returns instead of looking to blow the jackpot all at once.

4. Over Leveraging

Mistakes are inevitable during trading as traders are human, and humans are bound to make mistakes but that should not come in the way of your trading. Leverage in currency trading means borrowing money in order to maintain your trade.

Most traders fall into the trap of borrowing money and end up losing a lot of money especially when the return is much less than the borrowed money.

One thing that every trader must know is that if he is unable to make more profit on little leverage, there is no guarantee that a higher leverage would bring more returns.

Over leveraging is quite dangerous because whether you gain or lose, you still have to pay back what you owe your broker and this might leave you with nothing especially if the leverage brought little return or no return at all. `

Summary

Most traders get into a world of their own while trading in a bid to maximize all the profit they can. Sometimes they involve too many emotions during trading and end up making mistakes they should have avoided if they kept their emotions out of the trade market.

Some of these mistakes may cost them a lot and some traders are known to have taken a break from trading forex so that they can pull themselves together and get new lessons on how to go about the business of currency trading.

However, with prior information, traders can avoid such mistakes in future, especially over trading in forex trading.