Overtrading
Taking more positions than your strategy actually justifies.
Also called: too many trades · churning
In plain language
Overtrading usually comes from boredom, from a need to feel productive, or from loosening criteria after a quiet stretch.
Costs scale directly with frequency. Every additional trade pays the spread and commissions regardless of outcome.
It also degrades quality. Marginal setups taken to stay busy have lower expectancy than the ones the strategy was built on.
Why it matters
A positive-expectancy strategy can be turned negative purely by taking too many low-quality instances of it. Frequency multiplies costs while diluting edge.
Common mistakes
- Loosening entry criteria after a period without signals.
- Measuring productivity by number of trades rather than by adherence to the plan.
- Watching a lower timeframe than the strategy is built on.
Keep exploring
These concepts are connected. Understanding one usually makes the next one easier.
A written set of rules defining what you trade, how you size it, and when you exit.
The gap between the bid and the ask — the built-in cost of entering a trade.
The average amount you expect to win or lose per trade over a large sample.
Entering a trade because the move is already happening, not because the setup appeared.
Being unable to act because you are still looking for more confirmation.