Overexposure in trading refers to the situation where a trader has taken on too much risk in their portfolio. This can happen for a variety of reasons. One common reason is a lack of diversification, where a trader has invested too heavily in a single asset or market sector. This can leave the trader vulnerable to market fluctuations or changes in the specific asset they have invested in. Overexposure can also occur when a trader takes on too many positions at once, resulting in a portfolio that is too large and unmanageable. Additionally, overexposure can result from a lack of proper risk management techniques, such as not using stop-loss orders or not adequately assessing the potential risks of trade. It is important for traders to carefully consider their portfolio composition and use risk management strategies to avoid overexposure and protect their capital.