Understanding Quantity vs Quality in Stock Market

quantity Vs Quality
quantity Vs Quality

Most people associate trading with dazzling profits or a fall into a dump. The former because of the mouthwatering fortune of successful traders. The latter because of the terrifying losses of unsuccessful ones. The world of trading is, indeed, laden with risks. So today we will be talking about how to minimize that risk.

Most people don’t think about the quality vs quantity aspect of trade while some don’t understand it. Novice traders, trying to make the most out of the movements in the dynamic market, usually try to enter into multiple trades to maximize their profits in a short period. The market is vast, opportunities are numerous. 


The wise men say and the thick bulky history books prove. History repeats itself; the fact is more pronounced in the market. The fast pace of the market ensures that repetitions are bound to happen very soon, if not tomorrow. Thus, the veteran traders who have already passed the tests of time repeat from time to time, quality is more important than quantity, at least in trading for beginners. 

The history of the market has already proved the longevity of the market. The market will always stay, for it is an integral part of human civilization. Neither is today the last day nor is tomorrow, not for the market or for you. Thus, being over-excited and trying to pounce on every sight of potential opportunity without proper research can spell DOOM for your trading career.

Aspects of Quality Vs Quality in Trade

What is overtrading?

Overtrading refers to the excessive buying and selling of stocks by a broker or an individual trader. A well-off individual trader usually has rules about how much risk they take, including how many trades are appropriate for them to make. 

Continuing to trade after this limit is unsound. 

Often forgetting yourself in dopamine, not calculating risks appropriately and spending an immense amount of time trading are pretty good indicators of overtrading. The main disadvantage is miscalculating the risks and profits due to improper initial research. The primary cause of inadequate research is spending less time on it. The main point is that losses here can be far more than the trader can afford. 

Why is overtrading bad?

The word overtrading itself tells us why it is not good. Quality vs Quantity in stocks had seen a long battle with opinions going back and forth. As a general rule of nature, everyone has their own upper limits on everything. Thus, the limit of the number of trades before overtrading is subject to a person’s personal mindset. But simple numbers indicate: Without profit in your trades, the quantity will always make you end with the short end of the stick. 

As the house edge in a casino, there’s always something eating up your profits in the form of taxes and brokerage. With the increase in the number of trades, one increases the amount of tax and brokerage that s/he needs to pay, lowering the profits.

What are the advantages of qualitative trading?

The significant advantage of qualitative trading is, it is more accurate and less stressful than the other. Since you get more free time to research and understand your trade, the chances of turning out a profit are much better. 

Plucking away at the opportunity with more probability of turning into a profit is also less stressful since you don’t need to divert your attention to too many places. Other benefits of qualitative trading include the common notion of ignoring noise while trading and saving processing fees on the trade.

How to limit Overtrading?

The best way to limit overtrading is to set up rules for yourself and not ignore them when the time comes. Taking a break at regular intervals to regulate your thoughts definitely would save someone from losses compared to someone lost in the moment. A trader needs to keep a presence of mind at all times to avoid any mistakes that may or may not be irreversible. 

Another good way to avoid overtrading is to set your priorities and not take ambiguous trades. A better way of trading is to improve your understanding of a segment of the market and filter out the potentially profitable trades for the market you don’t understand much. 

Pouncing on every potential opportunity without understanding it inside-out is rather a pretty good way to lose money and make your trading meaningless. A good trader knows to take the best chance instead of a good opportunity.

Once again, the best way to limit yourself is to ultimately make a set of guidelines for yourself to follow.

Does it mean Qualitative trading is better than quantitative?

Quantity vs Quality in trading strategy has been a topic of debate for quite a long time. When all is said and done, the final answer to such a question is still dependent on the trader. There are different types of traders in the market who have different personalities and different ideas. 

Finally, the choice depends on the trader who is actually going to trade in the market. Qualitative trade definitely boasts a lot of advantages but without a bit of groundwork, a trader will never be able to tap into profits. Quality can underperform. Quantity repeats the process faster and may end up with very deep losses. 

How Chart Analysis helps you?

Chart Analysis offers you the right technical courses, approaching which you can get the right knowledge about the stock market. This is a platform that helps you to increase the worth of your trading skills. Here you will get the right guidance from Umesh Sharma who is working with an aim to provide the benefit of trading to every trader. 

There, sure, maybe a mouthwatering deal today that is not going to be available tomorrow. But there is sure to be something else tomorrow! Sadly, many traders overlook this fact. With the mindset of seizing the opportunity, many fledgling traders pounce on any opportunity they see without initial research that leads the track to their destruction.

The Bottom Line

The truth of trading is that there is still a search for the best practices of trading. The debate of Quantity vs Quality in the share market and stocks is not going to end anytime soon. There will always be a set of risks involved. The trader will always need to adapt to the tunes of the market. One of the best advantages of Quality over quantity is that the trader has more time to think about their decisions and take better steps for the next part.

Frequently Asked Questions

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