The Broski makes valid points, but the player limit is there to draw the line that otherwise would be hard to draw. Without the limit its possible to make good approved trades one after another after another and in the meantime completely "fuck up" the original roster.

Look it this way:
S1 - 3 players limit
Draft - 2 (or how many picks you have) players in, not counting against the limit above
S2 - as soon as the draft ends and July market opens you get the ability to trade 4 new player before hitting the S2 limit.

So by the November start of Season 2 you could have 9 new players on your/off your team. That's pretty flexible IMO. If 9 players aren't enough to change a team from S1 start to S2 start then nothing is.

The limit is also there to force the player think before trading -"Do I really need to trade my 4th string PG AJ Price for Jamal Magloire, or should I save the spot for later where I might trade for a real impactful player that could make the difference?"