Overtrading Definition

What Overtrading Mean?
1st Excessive buying and selling of shares by the broker on behalf of the developer in order to increase the Commission's broker collects.

This situation is known to occur when brokers are under pressure to set the security of newly signed by the firm's investment banking arm.

Also known as "churning."

2nd A situation in which a company increases its sales faster than they can fund. This usually leads to large accounts payable or accounts receivable and lack of working capital to fund operations.

Overtrading
1st One way to protect yourself from overtrading (churning) is through the transfer of account - a type of account that is manged in a lump sum instead of charging commission for each transaction.

2nd Many businesses become insolvent because they are trying to accommodate everyone who wants to buy their products. This leads to not being able to pay for the expenses used to produce the goods.