A Solution to Stop Over Trading

Feb 1, 2020 | Product and Service Reviews, Trader Psychology

I always say that successful trading comes from how well you can prevent yourself from becoming your own worst enemy because you aren’t necessarily playing against the markets. You are playing against how well you can stick to your plan in the face of losing money and changing markets. Over the past 6 years I have been trading, I learned a lot about myself. I learned that I am impulsive. I learned that I tend to make irrational trade decisions even though I know they are bad decisions. I’ve learned that when I have a big red day I am most likely to start revenge trading. I’ve learned that when I have a big green day I tend to keep trading to make even more. I know you might say to me, “there’s a simple fix to that, just have more discipline!” And you are right, I should have more discipline but it’s a lot easier said than done. Money has such an emotional influence on us that losing it can cause us to do some irrational things. Everyone responds differently to situations that trigger our emotions. Some people are good at not getting too irrational and some people need a little more help. I’ve learned that I need a little more help. I’ve made so many irrational mistakes that I know the situations that will trigger my irrational behavior. I know I have a tough time walking away when I’m in the red and not revenge trade and I know I struggle with walking away when I have a green day because I’m a bit greedy. I think knowing this about yourself is crucial to the road of being a successful trader. You have to experience many mistakes to know what your tendencies are when it comes to how you may react under financial pressure.

After falling victim to destroying my account due to a number of emotional decisions a countless number of times, my discipline has become much better. I don’t make these mistakes as often as I once did in my beginning years of trading. I’ve practiced maintaining discipline to stay true to my plan most of the time. But, there are still times where I fall victim to revenge and over trading. If you have ever fallen victim to revenge or over trading, you know it can be very detrimental to your trading account. In fact, revenge and over trading is the #1 reason traders blow up their account. So I needed a way to not be put in a situation where I would be tempted to revenge trade when I’m down big on the day or be tempted to keep trading when I’m up big on the day risking my gains. Just like when you go on a diet to lose weight, you would start by throwing out all the junk food in your house. It would be much easier to eat healthy if you weren’t surrounded by junk food tempting you to slip up right?

So the best solution for me was to somehow prevent myself from opening any new trades past a certain time. The best times to trade is within the first and last hour of the regular market open. This is the time where the liquidity is best and price moves enough to profit from. Any time between the first and last hour, the market starts to produce an environment where trading can be difficult. The retail traders start to call it a day and the algorithms start to take over causing the liquidity to die and the price to start going flat or sell off. Because of this, I have a rule to call it quits after the first hour of market open no matter if I’m green or red on the day.

In the past, my old habits would lead me to keep trading if I was down big within that first hour. I would find myself more tempted to break my rule and keep trading. Even though I knew this was a bad idea, I was more likely to cling on to the hope I can somehow make my money back by continuing to trade.

The same thing would happen even if I was up big within the first hour. I knew I could afford to keep trading because even if I were to make a losing trade, I would still have a cushion to still make a profit for the day. But since I continued to trade past that golden 1 hour of market open, the trades I took were losing trades more often than not. So I would end up giving back profit I made on the day most of the time.

I needed a way that would prevent myself from trading past that first 1 hour no matter what whether I was red or green for the day. I needed a way to basically shut down my computer to where it would be impossible for me to place trades past a certain time. So after researching and trying to come up with a solution I cam across a program called Simple Disable Key

Simple Disable Key is a program that you can use to turn off specific keyboard and mouse functions for any specific program for any specific time duration. This software basically makes my trading program unusable during the hours I do not want to be trading.

Since I use hot keys to place buy orders (shift+z and Shift+x) I have programmed them to be disabled between the hours of 10:30am est and 8:00pm est only when my broker (Lightspeed) is running on my computer.

I also program the settings for my mouse to be disabled inside the Lightspeed application past 10:30am so that I won’t be able to make trades using my mouse instead of my hotkeys. Finally, I disable the mouse and keyboard for the Simple Disable Key software itself so that in case I change my mind later in the day, I won’t be tempted to bypass these settings.

The video below will show you how this tool works and how I have configured the settings to my needs. This tool has saved my butt many times and I hope you find it as useful as I have!

 

 

 

Click to download the simple disable key program

Simple Disable Key Download

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