An entry without an agreed setup is a form of overtrading.
We see patterns everywhere, and that is the problem. As a result, we end up trading on feeling rather than probability and a clear risk/reward.
Overtrading is any trade based on a fear of missing out—or any emotion.
All traders overtrade at some point or other.
I refer here to day trading. But, it is a consideration for all styles.
Because of the intensity of day trading, concentrating on the ‘one thing’ is particularly relevant.
The one thing is one market, one session, one strategy, and to master one set up at a time.
The idea of the ‘one thing’ will fly in the face of what most traders do. Many will watch multiple markets across various sessions and apply different strategies and setups.
Suppose we learnt to sit on our hands. Watch and wait. Narrow our trading time, if day trading, to a few hours a day. Or be much more specific than that. Specify a session to trade every day with the same strategy and set up.
A FOREX market, for a while, tends to repeat in volume at similar times.
And how about, instead of bouncing around multiple markets, view only one. Get to know that market. How it moves, how far and how quickly—including spread, commission and expected slippage.
Similarly, with strategy. Do multiple approaches work? What is the statistical result over an extended period of each trade variation on our profit and loss?
Do we know if one works and another doesn’t?
Ditch what does not work—and more often than not, it will leave only one.
Maybe within that one (consistently profitable) strategy, we have different entry and exit criteria. But again, run the results methodically. Are they truly working?
Be ruthless and throw out any that don’t. The more we focus and specialise, the fewer mistakes we make.
And mistakes lead to loss and away from consistent profitability—the last two words being the goal of any serious trader.