Many Forex traders seem to think that by trading more frequently they are opening themselves up to more opportunity and that this will cause them to make more money.

This is wrong ; in fact, the main thing that high-frequency trading does is cause you to become stressed, frustrated, and take low-probability trades.

There is indisputable evidence that day-traders and scalpers make less money on average than lower-frequency traders. We are strictly referring to retail human-being high-frequency traders in this article, not proprietary commercial computer trading programs or algorithmic trading which sometimes results in thousands or tens of thousands of trades a day. It is just a fact of human nature that the more we stare at a price chart the more we get tempted to click our mouse button and enter a trade.

The fact that we worked extremely hard for the money in our trading account seems to go right out the window after staring at a 5 minute chart for a while. More trades equal more time and more stress. I personally believe in trading the daily chart with low frequency, meaning I take much fewer trades than most traders. We all know most traders lose money…most traders also trade a lot, so commonsense dictates that simply trading less often doing the opposite of most traders will improve our returns over the long-run.

Not to mention that the higher-frequency trader is going to spend much more of his precious time in front of the computer, probably stressed out and frustrated.

I prefer to spend less time in the markets and I also prefer to have low levels of stress, thus I mainly stick to the daily charts and I trade relatively infrequently compared to most traders.

The point is this: This will work to accelerate your profits whilst spending less time in the markets. Thus, you need to fight the urge to over-analyze, over-trade, or trade on low-time frames charts. Do you want to increase your overall R-factor whilst reducing your stress and emotion in the markets? This is how you should think about risk and reward, not in terms of percentages. If you are looking to build a consistently profitable track record to try and get an investor to fund you, they are ultimately going to be concerned with how many dollars you have returned relative to what you have risked.

The key point to take away from the example below is that both traders ended up with a 3R return for the month of May, but the first trader traded over 3 times as much, taking 15 trades in the month compared to the 4 trades of the other trader. You can imagine that the trader who only entered 4 daily chart trades that month had far less emotion, frustration and stress, and far more time and ease of mind than the guy who entered 15 4hr chart trades and ended up with the same result.

This is actually a relatively mild example, I know many traders who trade far more than 15 times in a month and lose money still, some of you are probably in that boat right now. So…why not try something different?

So, as we can see from the example track record above, higher-frequency trading does not necessarily mean higher-profits. Obviously, this is not a real track record, but the point still stands; when you take more trades you are naturally going to have to endure more losing trades which will need to be offset by more winning trades just to achieve the same profit factor.

It might help to think about the market as a garden, and each month there are a limited number of vegetables that the garden produces, but there are a lot of weeds. The more vegetables you take out of the garden each month, the greater the chance you have of pulling a weed next time.

Whilst the reasons why people trade too much can be many and varied, the primary reason is over-confidence. This is especially true after a winning trade or a series of winning trades. There is considerable scientific research that backs up the claim that most traders trade too often due to over-confidence. However, when they are successful, these investors irrationally attribute success disproportionately to their ability rather than luck, leading investors to overestimate their own abilities and trade too aggressively; even investors with more past failures than successes may become overconfident by over-weighting their successes.

According to a recent article on the New York Times website, men have a tendency to trade far more frequently than women, which works to drive up their costs and lower their overall returns, see here:. The economists found that while both sexes reducednet returns through tradingmen did so by 0.

Far more than women, men try to make sense out of this noise, and to no avail. The market does not care about you or your little feelings, so being right and wrong and having an ego about your trading are all totally irrelevant things to your bottom line.

So, learn to trade according to these facts and not in conflict with them, we can do this by simply learning to read the price action that the market produces for us and only trading when our high-probability price action trading setups are present. Perhaps the core idea to take away from this lesson is that you should not assign too much significance to any one trade. Remember, you can achieve the same overall R factor over the same period of time by trading less frequently.

You can do this by focusing on quality of trades rather than quantity of trades.

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Day Trading and Learning. Nial, I agree with your thoughts in principle. A valid set up results in a valid trade on what ever the time frame the chart is. Of course the lower the time frame the lower the amount of risk and of course the lower the amount of potential profit. So in the final analysis the higher time frame would be the optimal time frame for most traders, especially the ones like me with little experience.

Yeah, I think that is exactly what you said in the first place! Thanks for another fine article. You have a unique ability to rattle my brain and make me think more with each article. A trader does not have to risk more on higher time frames, they can simply adjust the trade position size accordingly. Have read through the course several times and it has helped enormously. Waiting for quality PA set-ups as Nial has taught really does help your account as well as your emotions.

Nial thank you for the lesson, me to I had a vision of trading full time not considering a risk of that.

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May confidence is growing each an every day when I read your work. My Forex Trading Plan is my first priority to discipline and control my emotion at times. Just wanted to say thank you for sharing such powerful information.

Decided 3 weeks ago to go into forex trading and to date all I have done is read on different aspects of what is involved. Your articles are among the most insightful yet so simple to follow and understand that i have read. I agree with you on this because recently I have been trading much and just as i made the money so i lost everything. But i was thinking that as a new trader when I trade everyday I get more experience. I got more losers from overtrading.

I hope this lesson gets drilled into my brain. As always an excellent article! This article was written just for me. Especially agree with this: I have been reading through your articles and I must say they are very interesting. The FACT is that most people come out with huge profit at trading CONTESTS organized weekly by brokers. If they only trade Daily charts and less trades, HOW are they able to perform so well within FIVE 5 DAYS? I also noticed that some of their trades lasts as little as 10mminutes.

Thank you Nial for the sharing! After reading this lession, I checked my trade journal. I have made rupees from daily chart but only from H4 charts. That clearly shows trading low time frames is no use. Once Again great nial, this artical guide me a lot so what onne should follow 1 min 5 min 15 or 30 min chart.? Thanks Nial, This article was written just for me. It was my story last week when I was over confident and tried to guess what the market was going to do. Too many times I guessed wrong.

After reading them I always feel like, I can do this, its not as difficult as it seems.

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I realize I almost became an addict,and this is just the right diagnosis and prescription. But what would a full-time trader be doing most of the time if he only trade so less, like trades a month, and why do they have multiple chart screens, when i think they only need one and just flip through different daily charts one or twice a day. Hey Nial, very wise indeed. As a result I started getting restless and traded a range even though my gut told me to stay out.

Obviously it was a loser and I had to be humbled to learn my lesson — BE PATIENT AND WAIT FOR THE EDGE TO APPEAR!

Thanks again Nial for all your priceless advice. I got your memo a long time ago. Forex boat brokers especially like the way you cut to the heart of the subject with the least amount of noise. Thank you so much Dr. Hai neil ,You may be right. But I want to enjoy the pain,tension and joy of each trade. Trading has become a craze for me.

Of course I am a professional forex trading strategy you can guess. But I enjoy trading.

Good morning I think you are right but I disagree in one or two points. As always you analyze and give your opinion truly and honestly so thanks. Another cause of over trading from my experience is chasing previous losses. Which in turn takes ones focus off the process and onto the money. Without fail, this results in emotional errors in trading. This article is worth reading again and again. In fact i have included it in my drill of continuously monitoring my susceptibility for making errors.

I will not talk only based on this excellent article, but talking about all of your work that you made available, that worth a lot more than you ask for. Thanks a lot for that Nial. Makes total sense, especially after last month, kingston ontario stock brokers had excellent trend trading conditions. My trades ended up one winner after the other.

I know I should not have traded as much as I did last two weeks, but I was so confident after all those winners that I just had to trade: Looking back the forex boat brokers of the trades of last two weeks were far less then that of the trade opportunities in may.

So yes, I am gonna try and sit tight and wait for those high quality and high probability trades to present themselves. That helped me trade only what I really thought was a really good setup. Nial, thank you for this article, and indeed a lot other articles that you write.

I am in Africa in a country where currency trading is a very new concept. Reading your articles and practicing your recommendations have always made me a better trader. Over-trading has been a serious problem to me causing me to experience numerous margin calls. But I believe that every article you share increases my hope to succeed! Thank you very much. I really apprecite your contribution in our life.

Your strategy is simple and straightforward. Smokejumper, motorcycle racer, catamaran racer, black belt in martial arts. So, my operating philosophy heretofore: I still fell for it. Thanks again for a great article Nial, What stands out most for me is the position size.

Hi Coach, You are right on point. I traded too many times in my first months. Those were the days i lost the most. Hadnt discovered you by then. I later came to agree with this forex trading application software reviews. These days, i scan the charts for only 10 minutes.

As a relatively new trader things that have contributed to the downfall of my first demo account are:. No trading plan No trading diary Seat of my pants or gut feel trading Over trading. For me being able to recognise where I have gone wrong is a huge advantage which I will absolutely be making use of.

Nial is right, over trading is stressfull and time consuming so I guess if you feel yourself going for that trade the is without edge — DONT DO IT! PA and patience, I am learning. This was an extremely important lesson for me. I took a trade on the London open this morning. Well, I should have but Greed kicked-in. I have also realized for myself by real trading that what you said here in this article marketwatch abk stock quote very true and honest.

Well said Nial, I have been thinking about this topic as well. Thanks Nial you are my Master. My biggest issue is over trading on smaller time frames.

And the comments about men vs. Have to check the ego at the door. Another great article Nial. Waiting for high quality setups is of fundamental importance. Hi NialHi traders I certainly do have an ego, why to be hypocrite about it.

Said that, one thing is for sure: I would rather by humble and successful than cool and broke how about you, fellow traders? I have this to say; I found this site when I was contemplating quitting forex market after loosing all I have in my account. But my hope is rekindled and base on what is shared here, I am seriously saving to refund my fx account.

Thank you to the Team. It is definitely tempting to try and as you say addictive. They are psychologically difficult and require much discipline! I am concentrating on the 4hr charts. I need to start looking at daily charts now.

This mmeans reducing my position size. But also a recent research concludes that day trading is more profitable than trading with weekly or daily charts. Nial,have you seen this report? Thanks for this wonderfull article.

I can fully relate to the over-trading syndrome. I now only trade daily or weekly trade setups. I spend less time looking for trades and feel more relaxed due to their higher probability of success. Old habits die hard but when you get the urge to over-trade take a moment to listen to your rational self. Over time your will-power will increase to the point that you will no longer feel the need to go down this path. Great article as always Nial!

It is true that overtrading or high-frequency trading are very addictive. Like gambling, overtrading makes you a loser. This article is valuable for those who trade often and lose their money. Thanks Nial for the tutorial. Got you nial trade like a girl LOL. As usual great insight and food for thought less may actually lead to more I definitely think you are on to something. Your email address will not be published. Notify me of follow-up comments by email.

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Low-Frequency Vs High-Frequency Forex Trading By Nial Fuller in Forex Trading Articles 83 Comments. The quickest way to improve your trading is to… …Stop trading so much! High-frequency; An example Do you want to increase your overall R-factor whilst reducing your stress and emotion in the markets? Treat The Market Like A Garden It might help to think about the market as a garden, and each month there are a limited number of vegetables that the garden produces, but there are a lot of weeds.

The science of why people trade too much Whilst the reasons why people trade too much can be many and varied, the primary reason is over-confidence. According to a recent article on the New York Times website, men have a tendency to trade far more frequently than women, which works to drive up their costs and lower their overall returns, see here: So, there are a couple important lessons to learn here: Final thoughts… Perhaps the core idea to take away from this lesson is that you should not assign too much significance to any one trade.

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