John K Smith#61

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What is overtrading and why is it dangerous in forex?

Overtrading occurs when traders open too many positions relative to capital, often driven by boredom, greed, or revenge trading. In forex, high leverage magnifies this danger, leading to margin calls and rapid account depletion. Signs include chasing every market move, neglecting risk-reward setups, and trading without signals. Dangers: excessive transaction costs, emotional burnout, and inconsistent strategy execution. Institutions guard against overtrading with strict mandates and limits. Retail traders must self-regulate—setting daily/weekly trade caps, journaling impulses, and taking forced breaks. Overtrading is rarely a strategy issue; it’s psychological, stemming from lack of discipline. Recognizing it is vital because even profitable systems fail if traders lack restraint. Less is often more in sustainable forex trading.