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The Dangers of Undertrading That Forex Traders Must Beware Of

Undertrading is a condition where a trader executes fewer trades than necessary, often due to excessive fear of risk or loss. This condition is equally dangerous as overtrading, especially for those aiming to pursue full-time trading careers. In this article, we will discuss what undertrading is, its dangers, and how to overcome it.

What is Undertrading? 

Undertrading occurs when a trader executes too few trades, despite clear opportunities in the market. This is often caused by excessive fear of losses. Human nature's inclination to doubt and fear facing tough decisions can lead traders to hesitate in executing existing opportunities, ultimately harming their trading performance.

Dangers of Undertrading

  1. Impeding Trading Performance: Undertrading prevents traders from reaching their full potential. Traders who are overly risk-averse miss out on many potentially profitable opportunities.

  2. Inability to Achieve Success: Excessive fear of loss makes it difficult for traders to achieve long-term success. Without consistent execution of valid opportunities, trading performance remains suboptimal.

  3. Increasing Uncertainty: Traders experiencing undertrading tend to feel more hesitant and unsure about their decisions. This can lead to poor decision-making and loss of confidence.

Identifying Undertrading Traders experiencing undertrading often make statements like:

  • "My trading plan says I should enter the market, but I didn't."
  • "Why didn't I execute that opportunity earlier?"

These statements are clear signs that a trader is undertrading.

Overcoming Undertrading

  1. Train Your Mindset to Embrace Risk: The first step is training your mind to accept risk. Positive suggestions and visualization can help traders remain calm when making decisions in the market. Gradually, the subconscious mind will become more accepting of risk.

  2. Use a Trading Plan: Every trader should have a clear trading plan. Entry and exit from the forex market should be based on a well-defined plan, not on instinct or emotions. If you find yourself undertrading, consider loosening some criteria in your trading plan to better capitalize on existing opportunities.

  3. Create Two Accounts: Create two accounts: one demo and one live. Use the demo account to test trading opportunities that you may not be confident enough to execute in a live account. Having these two accounts allows you to assess your trading potential without the fear of losing real money. This is a crucial step in overcoming undertrading and understanding your trading potential.


Undertrading is a serious issue that can hinder a trader's success. All traders, regardless of their trading frequency, should have a clear trading plan. After creating a trading plan, it's important to self-assess whether you are overtrading or undertrading. Based on these assessments, you can adjust your trading plan to meet your needs and improve your trading performance.

Remember that forex trading involves risks, and fear of risk should not prevent you from seizing existing opportunities. With the right mindset, discipline, and a solid trading plan, you can overcome undertrading and achieve success in forex trading.

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