Overtrading: meaning, definitions and examples

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overtrading

 

[ oʊvərˈtreɪdɪŋ ]

Noun
Context #1 | Noun

financial trading

Overtrading refers to the practice of buying and selling financial instruments too frequently, resulting in excessive transaction costs and potential losses. This often occurs when traders lack discipline or proper risk management strategies, leading to impulsive decisions. Overtrading can diminish profits and increase the risk of significant losses.

Synonyms

excessive trading, overactivity, overtrading risk

Examples of usage

  • The investor faced severe losses due to overtrading.
  • Overtrading can erode your capital quickly.
  • Many novice traders are prone to overtrading in volatile markets.

Translations

Translations of the word "overtrading" in other languages:

🇵🇹 excesso de negociação

🇮🇳 अधिक व्यापार

🇩🇪 Überhandel

🇮🇩 overtrading

🇺🇦 перевищення торгівлі

🇵🇱 przewyższenie handlu

🇯🇵 オーバートレーディング

🇫🇷 sur-négociation

🇪🇸 sobreoperar

🇹🇷 aşırı ticaret

🇰🇷 과도한 거래

🇸🇦 التداول المفرط

🇨🇿 nadměrné obchodování

🇸🇰 nadmierné obchodovanie

🇨🇳 过度交易

🇸🇮 prekomerno trgovanje

🇮🇸 of mikið viðskipti

🇰🇿 артық сауда

🇬🇪 მეტისმეტური ვაჭრობა

🇦🇿 overtrading

🇲🇽 sobretender

Etymology

The term 'overtrading' emerged in the jargon of finance and trading during the late 20th century with the rise of electronic trading platforms. As markets became more accessible to individual investors through technology, the prevalence of overtrading increased, particularly among novice traders who often acted on emotion rather than strategy. In essence, overtrading combines elements of poor judgment and a lack of trading discipline, leading investors to make numerous trades that can compromise their capital. Its roots can be traced back to traditional trading practices where speculating often led to reckless trading, but as investment strategies evolved, it became apparent that overtrading is a significant risk factor that can be mitigated through education and ethical practices.