Secret 16

Overtrading is your greatest enemy

Gann called overtrading the “greatest evil.” He felt it was the cause of more losses than anything else, and who am I to disagree with one of the masters? The average novice trader really doesn't have a clue as to how much money is needed to be successful, and he invariably buys (or shorts) more than prudence dictates. He might be right in his analysis or determination of the major trend, but because he takes too big a position, he is forced to liquidate when the margin clerk calls. When he's liquidating, so are the other novices, and that's when the smart money moves in. The money runs out just at that critical time when it's ripest to enter. The over-trader is exhausted and misses the profit opportunity ...

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