There is a line among the fragments of the Greek poet Archilochus which says: “The fox knows many things, but the hedgehog knows one big thing.”
More here – American Consequences.
Intriguingly most traders would like to be a variation of a fox since the belief is that the more you know the better you will be at any given task particularly trading. This is an additive approach to problem solving – the belief that if you layer more information on a problem then the inherent opacity of the problem will be resolved. Very rarely do people take a subtractive approach – that is removing information and trying to simplify the solution.
Consider the table below which I generated for our Mentor Program to show the persistence of returns in a market. The thing I noticed the most when I went and looked back at each of these stocks was that the majority were simple breakouts from congestion. To identify them required no great analysis, no special indicators, no understanding of the phases of the moon just an ability to draw a straight line across the chart and buy when price broke above that straight line.
The question all traders should ask themselves is why cant they draw a simple straight line and more importantly why cant they listen to what it is telling them.