Among a host of questions that bother nearly every new trader is how many trades they should make every month. While, in general, the question might not seem as important as others, it is, however, quite crucial if you’re looking to hit the chords with complete precision; or in a more subtle terms, if you’re looking to optimize the return from your every trade. After all, contrary to what the self-claimed “experts” and your ego may tell you, over-trading is never good and is an ingredient to poor return.
No Hard-Hitting Formula
“How many trades should I make every month”—sadly, there’s no hard-hitting answer or formula to this. Depending on a host of factors, it varies from individual to individual to individual. You need to consider a range of things to find yourself an ideal spot here that not only delivers on your trading goals and expectations but also suit your style, preference and comfort level.
- Time Frame: Trading time frames are one important consideration. If yours is small time frame, unsurprisingly, you will trade more—often ending up over-trading.
- Trading style: Trading style has to do more with what you’re comfortable with than the current market trends. What’s your trading style? How diverse do you like your portfolio? Are you comfortable with day trading? These are questions that plays direct role in deciding how many times you should trade every month.
- Market Trends: Regardless the time frame and your style, you must be proactive to make trading decisions in accordance of current stock market trends. Period.
Finding Your Sweet Spot
Of course, there are countless other factors. The mentioned are the broadest and most important ones. When you combine these three together, you can get an estimate of an ideal number of times you should trade. Of course, this sounds easier said than done.
And when it looks too difficult practically, it is always better to incorporate to your trading approach what the experts say and what has already proved to yield better outcomes.
Have Long Time Frames- Check your Overtrading Habits
Having longer trading time frame charts (daily and 4-hours) are expert recommended and have proved to be quite rewarding. In this frame, the price action is much more reliable. Also, since the stock market doesn’t move fast and erratically, it’s easier to define trends. Meaning, you get ample of time to think things through and maximize your return. This subsequently saves you from over-trading, keeping you within the line of defense.
So to really know how many trades are fine every month, you must know where you are right now. How many trades you’re currently making? If it looks too much and you think you can benefit by reducing the number of trades, do it. That reduced number is an ideal spot for you.