Overtrading - with Bruce Kovner

In my own opinion, overtrading (trading too large positions relative to your equity) is the no.1 reason that inexperienced traders tend to blow up their accounts. Following up from my two recent posts about this subject, here is a short extract from Bruce Kovner's interview with Jack Schwager in Market Wizards talking about this very topic. Kovner has achieved incredible results in his trading career, so his views should be listened to:

Overtrading

Any method of trading suffers periods of drawdown, and a string of losses can have a devastating impact upon your equity. Making sure that you have your risk parameters set at sensible levels is a pre-requisite for long-term trading success. Even if you are using a system with a high positive expectancy, you always need to ensure that you factor in the unexpected when determining risk levels.