Ever heard of the line, “Try and try until you succeed?” Let me tell you a little secret.

Sometimes, it doesn’t apply to trading.

One of the biggest mistakes newbie traders make is overtrading. Fueled by the fear of missing out, they throw themselves at every setup they see, convinced the next one will be the big winner.

Now, do not get me wrong. You need to take risks to succeed in trading. But there is a big difference between making smart, calculated decisions and proper risk management, and blindly risking your money on every opportunity that comes your way.

This shotgun approach does not just drain your trading account. It also wears down your confidence and mental capital.

Here is a typical scenario:

After losing a trade, you see a new setup and you decide to take it, thinking that it will be a winner and it will offset your loss. Sha-bam! The market reverses and the trade turns out to be a loser. Now you just bruised your ego and your account even more!

Instead of spreading yourself out too thinly, why don’t you try specializing first? This is what niche trading is all about.

Royce Gracie, dubbed one of the best mixed martial artists of all time, used his mastery of jiu-jitsu to defeat fighters of mixed disciplines.

Trading is no different. You find what fits you, and you master it.

To define your niche in trading, consider these four key factors:

Currency pairs

Each currency pair has its own behavior. Matching your personality to the way a pair moves can make all the difference.

For instance, if you enjoy trading with risk sentiment and if you like volatility, then maybe you’ll do well trading crosses like EUR/JPY and GBP/JPY.

Time frames

How much time can you devote to trading? Which trading session is active during your trading hours? Do you thrive in fast-paced trading conditions? Are you capable of making decisions on the fly, or do you need a lot of time and preparation before you commit to a trade?

These are questions that must be answered for you to determine your ideal time frame and define your specialty.

Trading framework

There are successful traders who, from many years of experience, make decisions based solely on intuition and gut. So, unless you’ve done and seen it all, making snap trading decisions may not end well for your account.

You need to develop a framework that makes sense to you to help you understand and internalize market behavior. And with this framework (whether it be chart patterns, moving averages, or trend lines), you can then make better trading decisions.

Trading strategies

This basically addresses the manner in which you will be trading your market framework once you have figured out which behavioral tendencies make the most sense to you.

For example, if you’re good at recognizing consolidation patterns, then you’ll have to figure out whether playing breakout setups or range reversals would be most comfortable for you.

Some of you may be more comfortable trading ranging markets while others prefer riding trends. There are even traders who prefer working with numbers and statistics rather than charts and candlestick patterns.

Keep in mind that the goal isn’t to close doors and limit ourselves when undertaking niche trading. On the contrary, we do it to grow as traders.

It helps us overcome the pitfalls of overtrading and sets the stage for expanding our horizons down the line. So you see, the sky’s the limit once you’ve defined your niche – your very own corner of the sky!