InvestorQ : I recently lost a lot of money trading in the markets. Can I trade more aggressively and recover the money?
Juvina Maggie made post

I recently lost a lot of money trading in the markets. Can I trade more aggressively and recover the money?

Answer
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1 year ago


That is something that is best avoided. Overtrading is a cardinal blunder a lot of investors commit. When they make losses they try to outsmart the market by trading aggressively. In the process you only deepen your losses in the market. Overtrading results in less profits; so trade to a plan and a certain strategy! Before we come to the costs of overtrading, let us talk about the two basic reasons why you should avoid overtrading. Firstly, when you overtrade you go against your basic trading rule book and the moment discipline is lost, your trading goes for a toss. Secondly, in case of investment exposures, overtrading results in inadvertently increasing you stake to a particular story or stock without any concomitant benefits. Now we come to the costs part of it. Overtrading has cost implications in terms of transaction costs, statutory costs, opportunity costs and also tax implications. Never overtrade in panic as you are likely to be on the wrong side.