Overtrading

Most edges are sparse. A trend-following strategy might produce ten clean signals a month. A breakout system, maybe twenty. A mean-reversion approach, more but with smaller per-trade size. When a discretionary trader takes substantially more trades than their stated strategy implies, the excess trades are almost by definition lower quality, because the high-quality ones were already taken.

The cost of overtrading is rarely a single catastrophic trade. It is a slow drag from many small trades that, individually, look defensible and, collectively, eat through commissions, spreads, and the trader's attention budget. The classic symptom is a year-end review where the trader had profitable months but lost on the year because the marginal trades each took a small bite out of total returns.

The fix is not to take fewer trades arbitrarily. It is to track which trades are inside the trader's stated playbook and which are not. The unplanned trades, in aggregate, almost always underperform the planned ones, and naming them as a category is most of the work.