5 Reasons Why Trading Less is Better?

Every once in a while, I get traders asking me to coach and help them with their Day Trading  (also known as Intraday Trading) systems. I truly believe that day trading is the best way to build Chart time (see article) provided that these novice traders are using a demo account only. However, a part from building chart time, there is not enough reasons to Day Trade.

So, for today, let us dissect this topic a little more and let me share my reasons for avoiding Day Trading and why I would strongly encourage traders – old and new not to Day Trade.


1. More Trading increases Chances for Emotional Turmoil

Trading can be quite an emotional activity and this is especially true when real, hard earned money is at stake.

Traders who are not used to having their savings being tested in the market place will find that trading can drain them emotionally. If you are new to trading, every time you place a trade, you will feel excited, scared and hopeful all at the same time. Your heart pretty much pumps a few beat faster and every trade is a roller coaster ride for you.

Now, imagine if you are a Day Trader, you will likely place between 5 and 35 trades a day. All these “roller coaster rides” will just consume all your mental energy and you will end up having to rest for the remaining parts of the day. Alternative, you become so tired that you cannot (or struggle) to make rational trading decisions any more – which has often led to many losing trades.

2. Tight Stops reduces Opportunities Cost

NewsHave you ever taken a trade, got stopped out because of a tight stop loss management and then see that price moves in your direction? You then realise that you should have just placed another order but you were, at that point, pretty emotional about it. Hence, you missed a good trade?

Well, this is what happens when you are a Day Trader. I am not generalising here but this is what many novice traders experience before they realise that they have lost countless Opportunities to be profitable.

That is my point here, those are great opportunity costs lost. Also, that is really unnecessary and all it does it help brokers make extra profits.

Instead, traders should just avoid Day Trading and place their stops in more conservative stop locations. By doing so, they increase their chances of winning a trade and, the chances are, they will become consistent faster than many Day Traders.

3. Management is More Important than Trading

Unknown by many Novice traders, the act of buying and selling in the market is only a very small part of their trading career. In fact, about 70% of trading should revolve around trade management which includes:

  • Market Analysis
  • Time (Entry/ Exit) Management
  • Risk Management and
  • Money Management

As you can see, the amount of time spent on placing a trade (relative to the above activities) is really small.

If you agree with the above, then, technically, you should not have enough time to be placing 5 to 35 trades a day. Instead, you will likely be placing approximately 5 to 15 trades a month.

More importantly, since you are doing more prep-work and research, the trades should also be high quality trades. The chances are you will be increasing your success rate as you invest more time into Trading Management.

4. Let Money Work for You

There are so many ways to trade the market and there are many ways to take profit from the market. Unfortunately, many traders have the perception that they MUST be at their charts all the time to be very profitable.  Well, believe it or not, that is a False Myth. As mentioned in my previous article (see article), that is just an amateur’s assumption.

In my view, traders should focus on what they want to get out of trading. Many want to have financial freedom and that includes having the lifestyle to work less so that they can appreciate life a little more. However, they forget that they will not be able to achieve that if they spend 8 hours a day at the charts.

5. The Power of Position Sizing

position sizeLast but not least, the Power of a Leverage product is the key to increasing your profit (as oppose to trading more). As discussed in Van K Tharp’s book – Super Trader (see link) – you can optimise your position sizing to maximise your returns.

For examples, if you have been meeting your monthly target of 6% per month for 6-10 continuous months, then you can seriously consider increasing your position size without changing your trading system or routine. You can then reach higher targets quite easily.

Please note that this is NOT advisable unless you are consistently profitable. Remember, consistency comes first.


The above are just some of the reasons why I truly believe that Less Is More. If you are a Day Trader and you are trading between 5 and 35 trades a day. The first thing to ask is – are you consistently profitable? My assumption is that many of you reading this now are NOT consistently profitable. If you really want to be consistent, try moving up a time frame and trade start trading less.

Thank you for reading and happy trading!!


Leave A Response