What is Overtrading?
Ortiqcha savdo
In short
Taking far more trades than the plan justifies: costs and mistakes pile up.
Overtrading is taking far more trades than your strategy calls for: opening positions without a setup, out of boredom or a feeling that you "need to be in the market".
Causes
- Boredom and the urge to act — "I haven't done anything today";
- FOMO and revenge trading;
- The false belief that more trades = more money;
- Constant apparent signals on low timeframes.
Why it hurts
Every trade has costs: commission (if any), the spread and slippage. Per trade they are small, but over hundreds of trades a month they eat a meaningful part of the account. More importantly, quality drops: along with the best setups you take mediocre and bad ones, which lowers the strategy's expectancy. Fatigue and loss of focus add further mistakes.
How to prevent it
- Define entry conditions as a written checklist: if not all are met — no trade.
- Set a maximum number of trades per day or week.
- In your trading journal, tag trades by setup type and track the results of "off-plan" trades separately.
Example
Two traders, each with a $10,000 balance. Assume average costs (spread and slippage) of $4 per trade.
- Trader A: 5 planned trades a week → $20 a week, $80 a month (4 weeks) — 0.8% of the balance.
- Trader B: 40 trades a week → $160 a week, $640 a month — 6.4% of the balance.
Trader B has to make 6.4% a month just to break even. On top of that, if most of the extra 35 trades are off-plan, their average result is usually negative.
Mistakes and tips
Not trading is a position too — waiting when there's no setup is part of the strategy.
Each month, compare planned and unplanned trades in your journal — the difference often says a lot.
Account for trading costs: a spread that looks tiny on one trade adds up to a large sum over hundreds.
Frequently asked questions
- How many trades a day is normal?
- There is no universal number — it depends on the strategy. What matters is not the count but whether each trade matches your written entry conditions.
- How do I know if I'm overtrading?
- If a significant share of your trades are off-plan, or opened after boredom, a loss or excitement, that is a sign of overtrading.
Learn it in the Academy
This term is covered with hands-on examples and a quiz in these lessons of the interactive course.
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