In simple terms
Undertrading is the systematic execution of fewer valid signals than a strategy specifies. It is measured against the plan, not another person's trade count.
Disciplined waiting or missed signal
Staying flat when no setup exists, a no-trade condition applies, or risk is unacceptable is discipline. Undertrading requires a qualified signal, genuine ability to execute, and no planned prohibition.
How to measure it
The journal compares eligible signals, submitted orders, reasons for omission, and technical failures over a sufficient sample. Few trades do not automatically mean undertrading; a selective strategy may produce long periods without any transaction.
Sources
- CME Group, Trading Strategies in Your Trade Plan — Separates setups, trigger points, and entry conditions defined in advance.
- CME Group, Risk Management and Your Trade Plan — Requires risk, leverage, and exposure to be acceptable before an order.