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Overtrading: why more trades usually means less money

17 September 2026 · AlgoRishi
20SENSEX options lot size
₹40spread cost per lot, round trip, at a ₹1 spread
100strike step on SENSEX
91–93%of F&O traders lose money (SEBI study)

Ask a trader who had a bad month what went wrong and you will usually hear about one trade. The chart, the fake breakout, the stop that got hit by two points.

Then ask how many trades they took. That is almost always the real answer.

The auto-rickshaw arithmetic

An auto driver in Pune or Surat does not earn more simply by taking more trips. Every trip costs him something before he earns a rupee — fuel, the empty run back, wear on the vehicle, the minutes he cannot use for a better fare.

Take twenty short trips in heavy traffic and he can end the day poorer than a driver who took six long ones. More activity, less money. Nothing about that is mysterious — the cost per trip never went away.

Every options trade you take has the same fixed toll. You pay it whether the trade works or not.

What one SENSEX round trip actually costs

SENSEX weekly options trade on BSE, expire on Thursday, move in ₹100 strike steps, and come in lots of 20. So the toll is easy to compute.

Suppose the bid-ask spread on your strike is ₹1. You buy at the ask and sell at the bid, so you lose roughly ₹1 per unit across the round trip. On one lot of 20, that is ₹20. Cross it twice — in and out — and you are near ₹40 per lot before you have paid a single rupee of brokerage, STT or exchange charges.

Now scale it. Four lots is 80 quantity, so a round trip costs around ₹160 in spread alone. Take eight trades in a session and the spread bill is roughly ₹1,280 — on a day where you may have been flat-to-slightly-right on direction the whole time.

The spread is not a fee you can negotiate. It is the price of changing your mind, and it is charged every single time you change it.

On a fast-moving or illiquid strike the spread widens to ₹3, ₹5, sometimes more. The toll scales with your impatience, not with your conviction.

Net result vs number of trades in a session (illustrative shape) break even best setups only every signal taken trades per day →
The shape most traders discover the expensive way: the first few good trades carry the day, and each extra trade past that adds cost and subtracts quality.

Why the curve bends down

Costs are only half of it. The other half is that your trades are not all the same quality.

Rank your setups honestly from best to worst. Trade number one is your A-grade setup — the one you would take with someone watching over your shoulder. Trade number seven is the one you took at 14:10 because the first six annoyed you.

When you increase trade count, you are not adding more A-grade setups. Those are rare; the market only offers a few per week. You are adding C-grade and D-grade ones, each carrying the same full toll as the A-grade trade. The average quality of your book falls with every extra click.

Revenge trading is overtrading with a story attached. The tell is simple: the size goes up while the setup gets worse. If you are increasing quantity after a loss, the decision was made by the loss, not by the chart.

Three numbers worth counting this month

These take ten minutes a week and they are specific to you. Nobody else's overtrading threshold is yours — a scalper on a tight spread and a swing trader on weeklies have completely different break-even trade counts.

A trade cap is a rule you set when you are calm, to be obeyed by a version of you who will not be calm. That is the entire point of writing it down before 09:15.

The uncomfortable part

SEBI's study of the F&O segment found that roughly 91–93% of individual traders lost money. That number is not caused by one bad tip. It is a volume business — thousands of small tolls, paid by people who felt they had to be in the market to be a trader.

Our own machine skips entire sessions. It took nothing on 17 September 2026. Blank days feel like failure and they are not; they are simply the sessions where the toll was not worth paying.

None of this is a recommendation to trade or not trade anything. It is arithmetic — and the arithmetic does not care how strongly you feel about the next candle.

Disclosure: AlgoRishi publishes signal tracking on real market prices using virtual capital, for information and education only. Nothing here is investment advice or a recommendation to trade. Futures & options trading involves substantial risk of loss. Past performance is not indicative of future results. AlgoRishi is not a SEBI-registered investment adviser or research analyst.