Blackswan Fx
Trade smart, not often: Why quality over quantity matters in forex trading

Why the Quality of Your Trades Is Far More Important Than the Quantity

The desire to trade is a common trait among most traders. However, this obsession can lead to a fear of missing out on potential opportunities, causing them to lose sight of the long-term nature of the market. Remember that market patterns repeat themselves, meaning another opportunity will arise. Over-trading is a prevalent issue among traders and a primary cause of failure, which can negatively impact both your trading account and your aspirations. Therefore, it’s crucial to avoid over-trading to increase your chances of success.

What constitutes as “over-trading”?

“over-trading” can be defined as engaging in an excessive number of trades. Signs of over-trading include frequently being in a trade, having a preoccupation with the markets and your trades, or being in multiple trades simultaneously without carefully allocating your overall risk. When over-trading, it is likely that you will experience difficulty sleeping and incur financial losses. To avoid over-trading, a prudent approach involves carefully selecting trades and filtering out unfavorable signals. In my personal experience, I typically trade between one to six times per week, employing a rigorous selection process.

Here’s how excessive trading affects your trading results and account…

Too many Trades diminish your edgeIn many pursuits, including trading, excessive activity or preoccupation can have a direct and negative impact on performance. For instance, consuming too much soda or fast food, overexerting oneself through exercise or

Excessive trading can dilute your trading edge, diminishing your chances of success. Although a trading edge increases your likelihood of success, there are a limited number of high-probability trade signals available, regardless of the strength of your edge. When you stray from your edge and take low-quality trades that do not meet your criteria, you decrease your chances of success and dilute your trading edge to the point where it is no better than random chance, or potentially worse.

It is essential to distinguish between market noise and high-probability price events…

…It is easy to mistake noise for actual price action signals worth risking your money on, but taking trades that are just noise further dilutes any edge you may have. To avoid over-trading, it is critical to have a clear understanding of your trading edge and how to trade it to ensure that you do not inadvertently take trades that do not meet your criteria. Before risking your hard-earned money in the markets, it is vital to know precisely what your trading edge looks like and how to trade it.

The spread and commissions reduce your profits

Casinos generate significant revenue through the frequency of games played, allowing their edge to play out in their favor repeatedly. Similarly, brokers in trading serve as the house and always win, given the high volume of traders who engage in excessive trading. As a retail trader or investor, your most significant edge is to trade less and avoid high frequency trading, which can lead to costly “churn” in your account due to spread or commission fees.

It’s important to approach trading with a premeditated, filtered, and careful selection of trades, rather than a casino player’s mindset. By avoiding frequent trades, you can maintain your trading edge and avoid giving the market or broker a constant spread. Consider that with every 100 trades, you may give back at least 100 to 150 pips equivalent in spread or commission fees, emphasizing the importance of a selective approach to trading.

Overdoing anything is typically a poor idea

In many pursuits, including trading, excessive activity or preoccupation can have a direct and negative impact on performance. For instance, consuming too much soda or fast food, overexerting oneself through exercise or

drinking an excess of water can all lead to negative outcomes. Similarly, fixating too much on one’s significant other can push them away and come across as unattractive and overly needy. The underlying truth is that too much of anything can be harmful, and in the case of trading, too many trades can certainly harm your account.

The human brain has a tendency to become addicted to certain activities, such as drugs, sugar, video games, gambling, blue light from smartphones, and trading. This is due to the brain’s reward system, which releases feel-good chemicals like dopamine when something feels good. In today’s world with all its unhealthy temptations, this trait can work against us and can even be fatal in some cases. It is crucial to be mindful of this tendency and to train oneself to become addicted to positive thoughts and processes instead of negative ones.

When it comes to trading, the flashing colors and moving prices on a computer screen can be addictive. If one is not careful, winning trades can lead to overtrading as the brain craves the feeling of “chasing” another win. Creating a trading plan that outlines one’s edge and behavior in the market is crucial to avoiding overtrading and losing money due to trading addiction.

A Cure For Excessive Trading

We have been trading for over 5 years and teaching traders for over half that time, we’ve learned many lessons in the markets. Based on our experience, we believe that following a plan can cure one of the over-trading “cancer” that is likely hurting their trading account.

One of the key elements of this plan is to limit the number of trades per month to a maximum of 15 to 25, ideally even less. While some aspects of your trading strategy can be flexible, it’s important to establish rigid rules around trade frequency to avoid over-trading. Setting a maximum number of trades per month can help prevent the urge to take on too many trades.

Wait for setups…

Additionally, it’s important to wait for setups that match your trading plan and apply a filter to determine whether a trade is worth taking or not. We suggest using a T.L.S. (Trend, Level, Signal) filter that looks for trades with multiple pieces of confluence in their favor. The goal is to trade like a sniper, patiently waiting for the right opportunity to present itself, rather than going after every trade that seems promising.

By using a filter and waiting for the right trades, traders can improve their odds of success while preserving their trading capital. This approach allows traders to use their resources wisely, avoiding the risk of running out of money or blowing out their accounts.

“Set and forget”

Traders tend to trade excessively due to their impatience in waiting for their trades to fully unfold before initiating another trade. It is important to remember that successful trades require adequate time to develop and in order to capture significant market movements, patience is essential, which also means avoiding excessive trading. A practical approach to achieve this is to set and forget your trades. By doing so, you not only increase your chances of earning substantial profits but also prevent yourself from overtrading and chasing trades.

Limit yourself to markets trending markets

Frequently, traders commit the error of engaging in trading activities in unstable market conditions. This results in them entering a trade that promptly turns against them, prompting them to seek out another one. This is when the pursuit of dopamine kicks in. However, hopping from one trade to the next is exceedingly perilous. It’s much safer to adhere to markets that are obviously trending and advancing in one direction, since this approach makes it less probable for you to engage in excessive trading.


The foundation of our trading strategy is centered on a low frequency approach, allowing us to trade as infrequently as possible while still capturing the most evident trade setups. Naturally, discerning the “best” and “obvious trade setups” necessitates a degree of learning and skill, rather than waking up one day with this knowledge out of the blue. However, through our professional trading courses and our “set and forget” (We have a custom EA which will automate this process for you), and you will acquire the ability to recognize a “high-quality” price action event and filter out the less desirable ones!

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