Forex Traders Should Avoid Overtrading

Online, October 9, 2012 (Newswire.com) - The leading forex education site IndependentInvestor.co.uk has urged forex traders to steer clear of the temptation to overtrade, to prevent jeopardising their portfolio and taking unwarranted risks in often volatile currency markets.

Overtrading occurs in instances where a trader's portfolio extends across too many different positions to cope with the challenges of the market. In leveraged trading, becoming overtraded risks jeopardising the integrity of a capital portfolio and creating the career-ending situation of trading account collapse.

By keeping the trading account balanced to enough positions to safely cushion, traders can give themselves a less arduous challenge in maintaining and monitoring their positions while cutting out the risk of a house-of-cards style collapse, according to IndependentInvestor.co.uk.

A spokesperson from IndependentInvestor.co.uk said that in avoiding overtrading traders could better manage their portfolios and the risks posed by trading in highly leveraged investment styles, and urged all traders to remain mindful of the risks of overtrading a forex account.

"Overtrading is one of the key pitfalls to which inexperienced and unfortunate forex traders succumb. Generally, overtrading tends to work its way in to the trader's psyche when things start to go well, and when initial signs of promise are taken to be representative of a wildly successful strategy. The trader then applies the same rules over two hundred positions, and before you know it you're overtraded and at severe and significant risk of losing everything in your trading account - including any other positions that might be making you money, or that might go on to make you money in the future."

"Because of the leveraged component, if sufficient positions go wayward your whole account may follow suit in a chain reaction, with the broker's margin call liquidating each trade, position by position, in order to automatically recoup its losses. The process of overtrading, and the inevitable fall from grace that follows can take very little time to progress, and it's crucial that all traders are as confident as possible in their limitations and capital and risk boundaries. That way, you can know where to stop and when to cap the number of different positions to prevent overtrading your account."

About:
IndependentInvestor.co.uk is an online investment and financial trading resource, specialising in offering traders access to proprietary materials, tips and how-to guides across different trading styles and disciplines. Aimed at covering the full scope of knowledge, from beginner to advanced, their resources cover the latest strategies and techniques for building a successful account along with the vital understanding required to trade proficiently.

For new traders, or for those contemplating switching brokers to save on the marginal costs of their trading , IndependentInvestor.co.uk maintains a database of the leading forex brokers and their service offerings, with independent reviews and ratings designed to help match traders with more suitable broker options.