Overtrading is a prohibited practice when brokers trade too frequently or excessively for their client accounts in order to generate more commission fees. This behavior can frequently occur without the client's knowledge or permission. Basically, the broker is trading with their own interests in mind rather than their client's investment goals. Overtrading causes the client to incur higher costs and makes it difficult for the client to achieve their long-term goals.

The US Securities and Exchange Commission (SEC) is able to hold brokers accountable for their trading practices. Brokers must always put their clients first and avoid any unauthorized, excessive, or inappropriate trading. The SEC can impose financial penalties or other sanctions to discourage overtrading.

Individual professional traders are also able to overtrade, but this type of activity is not subject to the same standards as brokers. Over trading can be very dangerous and devastating to individual traders, resulting in large losses if not monitored carefully. It is important for individuals to be aware of their trading habits and have a proper risk management system in place.

Individuals can massively reduce the risk of overtrading by self-awareness and risk management. Self-awareness involves being aware of mental factors that can lead to overtrading, such as impulse trading, lack of discipline and emotional trading. Risk management involves setting hard stops, limiting trading to certain products, assessing risk of each trade, and understanding optimal position size. Individuals should familiarize themselves with trading losses and use stop-losses to control their exposure to risk. They should also monitor themselves to check for any potential signs that could lead to overtrading.

In conclusion, overtrading is an unethical activity when brokers trade too often or excessively to generate more commission fees. Excessive trading can lead to large losses and difficulty in achieving long-term goals. Although overtrading is not regulated by the SEC for individual traders, individuals should still follow best practices to reduce their risk. Self-awareness and implementing risk management habits are essential for individual traders if they wish to avoid overtrading and its negative effects.