What Is Over trading

Refers to the excessive buying and selling of stocks by either a broker or an individual trader. Both are entirely different situations and have very different implications.

Understanding Over trading:

An individual trader, whether working for themselves or employed on a trading desk by a financial firm, will have rules about how much risk they can take (including how many trades are appropriate for them to make). Once they have reached this limit, to continue trading is to do so unsound lyrics. While such behavior may be bad for the trader or bad for the firm, it is not regulated in any way by outside entities.

However, a broker over trades when they excessively buy and sell stocks on the investor’s behalf purely for the sake of generating commissions. Overtrading, also known as churning, is a prohibited practice under securities law. Investors can observe that their broker has been over trading when the frequency of their trades becomes counterproductive to their investment objectives, driving commission costs consistently higher without observable