I was once a victim of frequent trading. I cannot say that frequent trading will definitely lead to failure, but it is indeed very difficult to be profitable if you trade frequently. Even though I have been trading for over a decade now and my mindset and finances are relatively stable, if I were to return to a state of frequent trading, I might still struggle to control myself because human nature is hard to overcome.
In my early days of trading, I could place dozens of orders in a day, trading non-stop from noon till night. I could skip meals and sleep, but I had to trade.
Upon reviewing my own state, I identified two main reasons for my losses:
1. Extremely high trading costs. At that time, I was trading dozens of times a day, entering and exiting positions. Coupled with my lack of understanding of the industry, my account was secretly charged hidden points and fees. After a month, the cumulative losses were shocking when I looked back at my trading costs. Even without hidden points, frequent trading incurs high fees, which is not worth it.
2. Frequent trading is highly likely to lead to a loss of emotional control. I experienced this myself; frequent trading can put you in a state of extreme excitement because trades come and go with both losses and gains, leading to quick outcomes, which can be very intoxicating. Once you're in that state, any so-called technical standards become irrelevant; you just want to act based on your emotions. For example, I used to draw trendlines on 5-minute candlesticks for breakout trades, but after a series of losses and losing my rationality, I no longer cared about whether the trendlines were broken. Any technical standard could become a reason for me to place trades. I felt dissatisfied and wanted to try again, seeing the market dip a little and thinking it would rebound, so I quickly made a trade. My original trading plan became useless; I had set rules for myself about position sizes and how to scale in, but all those rules became ineffective.
Originally, I traded 0.5 lots or 1 lot, but after losing ten or eight times in a row, I wanted to quickly recover my losses. So, I seized an opportunity that I thought was good and jumped in with 10 lots, hoping to recover all previous losses at once. As a result, after placing 10 lots, I became extremely excited during the holding period, and when the market turned against me and I hit my stop loss, I felt like a balloon that had burst, suddenly deflating. I was caught in this cycle of extreme highs and extreme lows, exhausting all my energy. The biggest risk in trading is not the failure of your techniques, but the loss of control due to human nature.
When you trade frequently, all your attention is focused on the market, and your emotions will be influenced by market movements. The market will make you cry, make you laugh, and make you lose control, just like a gambler who can't stop until they hit a loss limit; this is the magic of the market. Therefore, the only way to avoid losing control is to refrain from frequent trading and not become a slave to the market.
So how should one approach frequent short-term trading? You can trade short-term, but you must control the frequency and maintain distance from the market. There is a common phenomenon in trading where beginners favor short-term trades because they have a high frequency and a short holding period, requiring little long-term waiting and posing a smaller test of patience. I completely understand this eagerness to know the results, as it is human nature to seek quick profits.
However, if you really want to succeed in trading, you still need to control your frequency. For example, if you are a full-time trader, keep your trading frequency within 10 times a day, focusing on specific currencies to ensure you can operate smoothly without feeling rushed. If you are a part-time trader, controlling your trading frequency to 1-2 times a day will suffice, allowing you to avoid constantly monitoring the market and balance your life.
When you maintain a certain distance from the market and trading, you will find that the sky is bluer, the air is sweeter, and you no longer feel suffocated by the market's pressure. You will then have enough cognitive capacity to think and maintain rationality. Additionally, you must have your own trading rules. For example, a complete short-term trading system with well-defined details and strict capital management rules allows you to trade according to your own rules even if you are trading frequently, although this requires strong self-control.
Lastly, I want to remind you to pay attention to your trading costs. I find that many people overlook this aspect, but sometimes trading costs can cut into most of your profits. It is already difficult to achieve profitability in trading, and it becomes even harder when you deduct trading costs. Therefore, be sure to check if your account has hidden charges and whether the fees are normal.
Lastly, I want to emphasize that the purpose of trading is to make money, not to satisfy your trading addiction. Do not become a slave to your own desires.
