Why the Urge to Trade?
Psychological Factors
- FOMO -- fear of missing opportunities
- Loss aversion -- not wanting to "miss out" on anything
- Overconfidence
How to Overcome It?
Method 1: Set a Cooling-Off Period
Every time you want to buy, wait 24-48 hours before deciding.
Method 2: Ask Yourself Three Questions
- Does this investment fit my system?
- Am I buying because I fear missing out?
- (not available)
Method 3: Reduce Price Checking
Check prices at most once per day.
Summary
Methods to overcome the urge to overtrade:
- Cooling-off period
- Three-question method
- Reduce price checking
- Accept missing out