Overtrading

Overtrading

1. Excessive buying and selling of an investors stocks by their broker, also known as churning.

2. When a company is growing its sales faster than they can finance them. This usually leads to enormous accounts payable.

Notes:

1. One way to protect yourself from overtrading (churning) is through a wrap account.

See also: Churning, Wrap Account

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Overtrading

Excessive broker trading in a discretionary account. Underwriters persuade brokerage clients to purchase some part of a new issue in return for the purchase by the underwriter of other securities from the clients at a premium. This premium is offset by the underwriting spread.