Traders must have heard of the terms overtrading and undertrading. But you may wonder how much is considered too little for a trader to trade? How much is considered too much? Is there a "standard" number of orders that you should trade during the day?
There is really no exact answer to this question, and usually if you are looking for the above question, chances are you don't have a trading method that can help you make a profit yet.
Because a trading system itself will tell you how many orders you should enter in a day or a week.
Your trading method will tell you how often you should trade.
A well-defined trading strategy will tell you exactly when you will enter a trade and under what conditions, as well as when you should take profits or cut losses. When a Trader has a specific trading strategy, they will know how many trades they will take on each day.
For example, a trend trading strategy allows the Trader to enter many orders if the product that the Trader is trading is trending. In case the product/currency pair does not fluctuate much, the price goes sideways, it is obvious that the trend following method will not allow the Trader to enter many orders, or even have no opportunity to enter.
Your trading strategy will act as a filter on the number of trades you make each day.
What is the maximum or minimum number of orders you should enter per day?
As I said above, your trading strategy will determine the level at which you enter your trades.
Overtrading - trading too much is when you trade more than the average number of trades per day that your method allows. This usually happens because the Trader lacks discipline, feels bored and has the urge to place orders. Because these trades are based on emotions, they often do not follow the rules that your method sets, they will cause you to make unnecessary mistakes and increase commission costs.
Undertrading - trading too little is when you trade less than the average number of trades per day that your system allows. When traders place too few trades, they will miss out on many good trading opportunities in the market. This can happen because the trader is too afraid of losing, not ready or not confident in the trading method they are using.
Some traders mistakenly believe that undertrading is better than overtrading. They think that less is more. The flaw in this view is that once you have a good, proven trading strategy, missing out on too many trades will reduce your chances of success.
Develop a trading strategy that suits your Trader personality
If you don’t have a trading strategy or method yet, focus on finding and backtesting a trading method that works for you. For example, for trading strategies that allow you to enter orders at the market open. Typically, you will have between one and five orders at that time (with a low time frame). With a high time frame trading method, you will also have fewer entries than with short-term trading methods.
If you want to trade all day, choose strategies that adapt to different types of market conditions because you will be faced with many types of markets (high volatility, low volatility, trending, ranging, low volume, high volume...)
Then you have to test that strategy regularly, you will know how many orders that method allows you to enter per day. Do not trade more or less, because both ways can lead you to make mistakes.
