Overtrading: the pattern you can only see in your own log

It is Thursday. At 9:40 your setup comes and you take it. It works, and you close at +1.5R. At 10:30 there is a second one, not as clean but close enough, and it loses 1R. You are still up for the day.

Then the market goes quiet. At 11:15 you take a small breakout because it is moving and nothing else is. At 12:00 you take one to make back the 11:15 loss. At 13:30 you take one more because the day should end green. By the close you have taken five trades and you are down 1.5R.

Ask yourself about any one of those trades and you can explain it. That is what makes overtrading hard to see: no single trade shows it, only how many there were and what the later ones had in common.

What overtrading is

Overtrading is taking more trades than your plan calls for. It can look like:

• Trades outside your setup, taken because the market is moving and yours is not there.
• Trades after your day is done, when you already reached your daily loss limit or your goal for the day.
• Trades to win back a loss, taken soon after it, at the same size or bigger.
• Trades out of boredom, in a quiet market, so the session does not feel wasted.

There is no number of trades that counts as too many for everyone. A scalper can take fifteen trades in a day and follow the plan on every one. A swing trader can overtrade with three. What matters is whether your extra trades did as well as your planned ones.

Why you can't see it while it happens

Each trade is judged on its own. At 12:00 you are not thinking about your fourth trade of the day. You are looking at a chart that seems to offer a way back.

The pattern lives across trades. One late trade that loses is just a loss. Twenty late trades that lose on average is a pattern, and you only see twenty trades in a list.

You may remember the wrong ones. The fourth trade that turned a red day green can stay with you longer than the ones that made a red day redder.

So the only place to see it is your log, read back over weeks.

Where it shows in your log

Four views in your journal can show overtrading. Each one compares your trades with each other, not with a number from someone else.

Your 1st, 2nd, 3rd trade of the day. Group your trades by their number in the day and look at the average R of each group. Say your log over 60 trading days shows this:

• 1st trade of the day: 60 trades, +0.35R on average, +21R in total.
• 2nd trade: 45 trades, +0.20R on average, +9R in total.
• 3rd trade: 28 trades, −0.15R on average, −4.2R in total.
• 4th and later: 17 trades, −0.40R on average, −6.8R in total.

Over all 150 trades you made +19R. Your first two trades of the day made +30R, and everything after them gave back 11R of it.

Whole days, by how many trades you took. Count the days with one trade, two, three, and four or more, and add up each day's result. This answers a different question: not how your later trades did, but how your busy days ended.

The trade after a loss, and how soon you took it. Group the trades that came right after a loss by how soon you entered: within half an hour, or later. If the quick ones lose on average and the later ones do not, the extra trades are coming from the loss, not from the market.

Trades you marked as off your plan. If you mark each trade as in your plan or not, compare the two groups. Some off-plan trades are overtrading: the ones your plan did not call for at all. If the off-plan group loses, look at how many of those trades were extra ones.

Reading the numbers carefully

Count before you conclude. In the example, the 4th-and-later group holds 17 trades. Seventeen trades can show a loss by chance. Look at the count next to every average, and give a small group more time.

There can be another reason. Later trades also happen later in the session. If your 3rd trade of the day loses, check your results by hour too. If your trades after 12:00 lose whatever their number, the problem may be the hour, not the count.

Log every trade. If you leave out the trades you would rather not look at, the late trades disappear from the numbers, and the numbers say you are fine. So log the days you are not proud of too.

What to do with what you find

Set a limit from your own numbers. If your log shows that your trades stop paying after the second one of the day, a limit of two trades a day comes from your own trading, not from a rule you read somewhere.

Add a wait after a loss. If your quick trades after a loss lose, a fixed wait gives the next trade a chance to be a planned one. Thirty minutes gives you time to step away and read your plan again.

Write it down before the day starts. Decide your limit before the session, not during it. Put it in your plan, where you can read it before your first trade.

Check it every week. In your weekly review, count the days you went over your limit and what those trades did. A few weeks of that is a second set of numbers, and it shows whether the limit is working.

How Vink helps

The behavior question in Stats. Stats question 05, "How do I behave?", shows your 1st, 2nd, 3rd and 4th-and-later trade of the day, your days grouped by how many trades they held, the trade after a loss (within 30 minutes, later, and after a win), and your trades by whether you followed your plan. Each row shows the count, the average R, the total R and the range the average could really be in. A row with too few trades to read is marked as such.

An answer in one line. When your later trades are the habit that costs you the most, the question's answer says so, for example "Your 3rd trade of the day loses.", with the total they cost. If no costly habit shows yet, it says that too.

Search for it. Type "overtrading" in "Find a stat" on the Stats page and it takes you to your 1st, 2nd, 3rd trade of the day and to your days by how many trades you took.

A limit in your plan. Your trading plan can hold "How many trades a day, at most?" (Vink shows your busiest day so far next to it) and "After a loss, how long do you wait before the next trade?".

Your rule, shown back. When you log a trade dated today that goes past your limit, Vink shows a note with your rule and one fact, for example "At most 3 trades a day. This is trade 4 today." It does the same for a trade that starts inside your wait after a loss. Each rule speaks at most once a day.

The boundary

Vink never blocks a trade. It cannot reach your broker, and it only counts the trades you log. The note comes after you log the trade, not before you take it. What Vink does is show you the pattern in your own numbers, and show you your own rule when a trade breaks it.

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Overtrading does not show in one trade, so do not look for it there. Look at your later trades of the day, your busiest days and your trades right after a loss, set a limit from what your own log shows, and check it every week.