Overtrading and chasing losses
What you learn in 3 minutesThis lesson shows how two habits turn one losing trade into a losing week: trading far more often than the plan allows, and increasing the lot size to win the money back. On a chart, both look like a cluster of entries that grows after a red candle. We count the cost of that cluster in pesos on EUR/USD near 1.0850, so the arithmetic is visible before any money is at risk.
Thirty trades, and what the costs take
| Step | Amount | Note |
|---|---|---|
| Planned trades for the day | 2 | the number written in the plan before the session starts |
| Trades actually taken | 30 | the cluster visible on the schematic chart |
| Size on each trade | 0.10 standard lots | one tenth of a standard lot |
| Pip value at this size | ₱58.60 per pip | one pip on one standard lot is 10 units of the quote currency (100,000 x 0.0001); at 0.10 lots that is 1 unit, converted at about ₱58.60 per unit |
| Cost per trade | ₱117.20 | 2 pips of spread on 0.10 lots: 2 x ₱58.60 |
| Cost across 30 trades | ₱3,516 | 30 x ₱117.20 |
| Cost across the 2 planned trades | ₱234.40 | 2 x ₱117.20 |
| Extra cost from the 28 unplanned trades | ₱3,281.60 | 28 x ₱117.20 |
Spread varies between brokers and by time of day, so the ₱117.20 per trade is an example, not a quote. Some brokers add commission, swap on positions held overnight, or round the pip value; the peso conversion of the quote currency changes with the exchange rate.
The mistake people make here
The common mistake is to treat a loss as a debt that must be repaid in the same session. The reader adds trades, then adds size, and the day's costs grow faster than any single win can cover. Instead, set the number of trades and the size before the chart is open, and stop when either limit is reached. If the urge to win it back is strong, close the platform and write down what happened; the next session starts from the plan, not from the loss.Check yourself
At 0.10 lots on EUR/USD, what does a 2 pip spread cost in pesos if one pip at that size is ₱58.60?
2 x ₱58.60 = ₱117.20 per trade.
If the plan allows 2 trades but 30 are taken at ₱117.20 each, how much extra cost comes from the 28 unplanned trades?
28 x ₱117.20 = ₱3,281.60. The planned 2 trades cost ₱234.40, so the day's total cost is ₱3,516.