The more you click, the more you lose: Overtrading in action

What is overtrading and what does it look like

So, what is overtrading? Overtrading is when a trader:

• opens way too many trades,
• ignores proper analysis or trades outside their plan,
• acts emotionally instead of following a system.
  

Overtrading isn’t just a gut feeling that you’re doing too much. It’s measurable. Research by Zhang et al. (2014) tracked the behavior of over 100 participants in a simulated stock market environment.

And the result? The more trades participants made, the worse their returns were. That’s why researchers offer this clear overtrading definition: “A condition where trading volume negatively impacts overall returns.”

In other words: the more you click, the more likely you are to lose.

Interestingly, overtrading tends to spike during bull markets – especially when traders feel like they’re riding a hot streak and “just one more” trade couldn’t hurt.

The study also found that individuals with higher levels of extroversion or agreeableness are more prone to overtrading – likely because they trust their gut too much or get influenced by outside noise.

Overtrading meaning in real life

Whether you’re asking what is overtrading in trading or even what is overtrading in business, the takeaway is the same: More ≠ Better. Overload leads to poor decisions, loss of control, and – eventually – loss of capital.

Why is overtrading so dangerous

You might be thinking: “If I place more trades, don’t I have a better shot at hitting a winner?”. Unfortunately, it doesn’t work that way. Overtrading damages you on multiple levels – financially, emotionally, and mentally.

Financial damage:

• More trades = more fees, spreads, and slippage
• Lower-quality setups = more losing trades
• Higher volume = faster capital drain
  

Psychological damage:

• Frustration, rage, and revenge mode
• You lose trust in your trading plan – and in yourself
• Burnout kicks in – mentally and emotionally
  

And here’s where it gets especially brutal for Fintokei traders: Many beginners join a challenge thinking, “I just need to hit the profit target quickly.” So they start pushing.

Emotions take over. Discipline vanishes.  Result? Blown account. Failed verification. Confidence shattered.

This is why understanding the meaning of overtrading isn’t enough – you’ve got to recognize how it sneaks into your trading mindset.

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Why does overtrading even happen

Overtrading isn’t just a bad habit you can flip off like a light switch. It creeps in – subtly but consistently – especially when you’re not mentally prepared to handle the pressure and speed of the market.

Most of the time, your own mind drags you into it. Specifically, the emotional side of your brain starts whispering: “You should get back into the market…”; “This setup looks good enough… just take it.”.

One of the most common triggers? Euphoria after a winning streak.  Your confidence shoots up. You start believing you’ve cracked the code.

What used to be “I only enter when I get a signal from all 3 indicators.” turns into “This one might work – let’s go.”. You increase your risk, your discipline fades, and just like that… you’re overtrading. 

This psychological shift is backed by research. According to Bregu (2020), traders tend to overestimate their abilities after a few profitable trades. This overconfidence effect directly fuels overtrading behavior, often leading to worse outcomes than if they had just stuck to their original plan.

On the flip side, there’s revenge trading – the act of trying to get back at the market after a streak of losses. You feel the pain. Your ego wants redemption. 

So instead of stepping back and recalculating, you dive in again – impulsively. You’re not trading based on signals anymore. You’re chasing “the one” that will fix it all. Spoiler: it rarely does.

But it’s not always rage or hype. Sometimes, it’s just… boredom. You’re watching the markets all day. Nothing’s happening. You feel like you should be doing something – so you force it. You invent signals where there are none. You convince yourself it’s “good enough.”

Then there’s strategy-hopping – another common trap for beginners. After a few losing trades, you abandon your plan and try something new. And another. And another.

Instead of finding clarity, you end up in total confusion and overload – and the only constant becomes, you guessed it… overtrading.

The scariest part? Most people don’t realize they’re overtrading at the moment. Right when you should stop, your brain goes: “Just one more. This time it’ll work.”

A study by Richards & Willows (2018) confirmed that frequent traders aren’t necessarily more skilled. Instead, overtrading often correlates with lower financial literacy, higher risk appetite, impulsiveness and overconfidence – especially in younger, inexperienced traders.

7 signs you’re overtrading

1. You trade just to “do something”

You’re bored. There’s no real setup. But your finger’s itchy, so you click. “Eh, maybe this will work.” That’s not a trading strategy. That’s boredom disguised as a decision.

2. You’re hunting for signals that don’t exist

You planned to trade off the 1-hour chart. But after two quiet hours, you drop to the 15-minute. Then 5-minute. And suddenly… “This looks like an entry!” But let’s be honest – that’s not a signal. That’s your brain desperately trying to justify taking a trade.

3. You repeat trades in the same direction (even if they keep failing)

You go long. Stop loss hit. You go long again. Another stop. Still convinced “it has to turn around.”. That’s classic revenge trading – and a fast track to overtrading.

4. You stare at charts for hours

You’re glued to your screen. Every pip, every candle, every tick… The longer you stare, the more likely you are to force a trade just to “do something.” Overwatching = overtrading.

5. You don’t know why you took the trade

Someone asks, “Why did you enter that position?” And you don’t have a clear answer. Maybe something about RSI? Trendline? If you can’t explain it in one sentence, you’re probably off plan.

6. You increase your lot size after losing

You’re down. So instead of reassessing, you just go bigger. “I need to make it back.” This is how people blow their accounts in a day. Literally.

7. You feel like the market is leaving you behind

FOMO is real. You see movement and panic: “If I don’t jump in, I’ll miss out!” But you’re not trading because there’s a setup – you’re trading because you’re scared of doing nothing.

How to stop overtrading – for real

Build and follow a trading plan

No more “I’ll just see what happens.”. Every trade you place should match rules that you’ve written down – not just guessed.

Limit your trades per day

More trades ≠ more success. Especially if you’re new, 2–3 quality trades per day is plenty. Once you hit your limit, close the charts and move on. Why? Less trades = fewer mistakes = a clearer head = better results.

Manage risk like a pro

Without risk management, you’re gambling. Period. Set up:

• max risk per trade (start with 1–2% of your account),
• ideal risk/reward ratio (aim for 1:2 or 1:3),
• a fixed stop loss and take profit structure.
  

This protects your capital – and keeps your emotions from hijacking your strategy.

Cut down on the number of markets you trade

Watching 12 currency pairs, gold, DAX, and crypto at the same time? That’s a one-way ticket to analysis paralysis and… yeah, overtrading. Start simple: Pick 1–2 pairs + maybe one index. Less is more. Always.

Set strict entry criteria

Example: “I only trade if the 50 EMA crosses the 200 EMA and RSI exits the overbought zone.” Rules like these will stop you from taking “meh” trades out of boredom or stress. Every trade should have a reason. Not just a reaction.

Learn when to walk away

Feeling tilted? Emotional? Just not “on it” today? Shut it down. Step away. Grab coffee. Go outside. Pro traders know: It’s better to skip a trade than take a bad one.

Go back to demo (when needed)

If your trading is chaos, your emotions are fried, and your plan’s out the window – demo trading is not a downgrade. It’s a smart reset. Use a demo like a punching bag, not a toy.

Final thought: Trade smart, not often

If you’ve made it this far, congrats. You now know:

• what overtrading is – and how to define it beyond just a textbook answer,
• why it’s dangerous – especially for fast-track traders,
• how to spot it in real time,
• and most importantly: how to get out of it.

Trading isn’t about how many trades you place. It’s about how good those trades are. Skipping a day – or even a week – is totally okay. Because when the right setup does appear, you need to be focused and ready. Not burnt out from chasing noise.

Bonus: Before you click BUY or SELL… ask yourself

1. Do I see a valid setup according to my strategy?
2. Does this trade align with my plan?
3. What’s the risk/reward ratio?
4. How many trades have I already made today?
5. Am I trading because I’m bored, angry, or just emotional?

If you answer “no” to even one – pause. The market isn’t going anywhere. But you? You might be trading yourself out of the game.

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Resources

Bregu, K., 2020. Overconfidence and (Over)Trading: The Effect of Feedback on Trading Behavior. Journal of Socio-economics, 88, pp. 101598. https://doi.org/10.1016/j.socec.2020.101598.

Richards, D., & Willows, G., 2018. Who trades profusely? The characteristics of individual investors who trade frequently. Global Finance Journal, 35, pp. 1-11. https://doi.org/10.1016/J.GFJ.2017.03.006.
Zhang, J., Wang, H., Wang, L., & Liu, S., 2014. Is There Any Overtrading in Stock Markets? The Moderating Role of Big Five Personality Traits and Gender in a Unilateral Trend Stock Market. PLoS ONE, 9. https://doi.org/10.1371/journal.pone.0087111.