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Randy Frederick on Overtrading

Randy Frederick discusses his thoughts on overtrading

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Another problem that we often find that new traders will run into is overtrading, and that is being in a mindset that the only way to make money or the only way to have success in investing is to be constantly trading.

If the fundamentals and the technicals are completely opposed to each other, if the economic data is completely mixed, if the trends are sometimes showing up and sometimes showing down at the same time, and we have all sorts of different ways where we can find that, a lot of times the best approach, and this is something people don't ever want to hear, but I tell them often, is sometimes the best trade is no trade at all. Just sit back, stay out of the market or at the very minimum don't add additional money into the market, just sit back and wait until things settle down or until whatever this big event that might be coming up passes, and then maybe get back into the market. But there's no rule that says you have to always be trading, or that you have to be involved, or that you have to be doing something to make money happen. A lot of times if there's no way to make money, then maybe it's just best to try to stay out and then at least not lose any money.

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Important Disclosures

Past performance is no guarantee of future results.

All expressions of opinion are subject to change without notice in reaction to shifting market conditions.

Schwab does not recommend the use of technical analysis as a sole means of investment research.

This discussion is provided for illustrative purposes only, and should not be considered an individualized recommendation or personalized investment advice. The strategies mentioned may not be suitable for everyone. Each investor needs to review a security transaction for his or her own particular situation.


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