When High Frequency Trading Becomes Destructive To Your Portfolio

high frequency trading

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Each month Option Alpha has seen it's readership and members grow - which is great. As always, I've never done any advertising or marketing for this blog. I'd rather have it grow via word of month and social media which to me is "real" growth and not "paid" growth.

So thank you all and keep spreading the word!

As the website continues to grow, I'll get more and more emails each week about a higher frequency of trading. It's really starting to alarm me to be very honest. What is the big freaking deal with trading so much? More monitors, screens and trades doesn't make you necessarily "smarter" or better at trading.

What are your thoughts on trading frequency? Do you think trading more often is a good or bad thing? Add your comments to this post and share your opinion.

More and more beginners think that trading more is cool or popular. Maybe they even think that trading more gives them more opportunities to learn more about the market but this couldn't be further from the truth. The more you trade the worse you get - period.

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For our Premium Membership we typically send out 3-6 alerts each month and try to keep fairly consistent. Instead of focusing on trading more positions, we do a lot of analysis followed by more analysis and then make a solid trade. Too many traders email me and talk about making 5-10 trades a day! That type of frequency is just not profitable long term. Just look at the number of day traders that either lose all their money or quit within 6 months of starting - the numbers are staggering!

Stop making more trades and start making better trades. Analyze more frequently and learn to control risk. Go back and learn from past trades you made that didn't go well (I rarely see people do this one). If you focus on trading less and more consistent the profits will take care of themselves - our performance is living proof that 3-6 trades per month can be very successful.

About The Author

Kirk Du Plessis

Kirk founded Option Alpha in early 2007 and currently serves as the Head Trader. In 2018, Option Alpha hit the Inc. 500 list at #215 as one of the fastest growing private companies in the US. Formerly an Investment Banker in the Mergers and Acquisitions Group for Deutsche Bank in New York and REIT Analyst for BB&T Capital Markets in Washington D.C., he's a Full-time Options Trader and Real Estate Investor. He's been interviewed on dozens of investing websites/podcasts and he's been seen in Barron’s Magazine, SmartMoney, and various other financial publications. Kirk currently lives in Pennsylvania (USA) with his beautiful wife and three children.