GLOSSARY // Risk & Psychology
Overtrading
Overtrading is taking substantially more trades than a strategy actually signals — filling dead hours with C-grade setups, re-entering after stops, trading for stimulation instead of edge. It is the most common leak in day trading P&L because each extra trade adds cost while adding no expectancy.
The arithmetic is unforgiving. Edge exists in a handful of qualifying setups; commissions, spreads, and slippage apply to every trade taken. A trader whose plan produces two A-setups a day but who takes fifteen trades pays full friction on thirteen trades that carry zero or negative expectancy. Boredom and recent wins are the usual triggers — the fix is a written daily trade cap and setup checklist.
A trader's plan signals 2 quality setups a day, but they average 14 trades. Round-trip friction (commissions plus spread) runs about $7 per trade, so the 12 extra trades cost $84 a day in friction alone — roughly $1,700 a month, 17% of a $10,000 account — before counting the negative expectancy of the setups themselves.
Related terms
Educational only — not financial advice. Definitions simplified for clarity; markets are messier than definitions.