What is Overtrading?
Overtrading: Overtrading is taking too many trades, often beyond what your strategy specifies, typically driven by boredom, FOMO, or the compulsion to stay active in the market.
Full Definition
Overtrading occurs when a trader enters more positions than their strategy or risk management rules allow. It manifests in two ways: (1) trading too frequently — entering low-quality setups out of boredom or FOMO, and (2) trading too large — taking positions bigger than the risk management rules permit. Overtrading increases brokerage costs, degrades decision quality, and often leads to catching poor setups that erode the account.
Impact on Your Trading
Studies of retail trader accounts show that traders who take 10+ trades per day perform significantly worse on average than those who take 3–5 selective trades. Each additional trade beyond your optimal number adds noise, costs, and emotional fatigue.
For Indian Traders
In NSE intraday trading, brokerage and statutory charges (STT, GST, SEBI fees) add up quickly with overtrading. A trader taking 20 MIS trades per day in Nifty options may be paying ₹2,000–5,000 in charges daily — money that must be earned back before any real profit begins.
How to track this in your journal
Set a maximum trades-per-day limit in your trading plan and track adherence in your journal. Tag any trade taken after exceeding your limit. Review those trades separately — the data almost always shows they underperform.
Frequently Asked Questions
How many trades per day should I take?▼
Quality beats quantity. Most consistently profitable intraday traders take 2–5 trades per day, focusing only on their best setups. If you find yourself taking more than 8–10 trades regularly, you are likely overtrading and need to tighten your entry criteria.
Track Overtrading in your journal
Use Trade Prom to monitor how overtrading affects your trading results.
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