Sharpen Your Trading With Occam's Razor

Would you believe that a 14th century priest, and hismight give you more data, but does it really give you
concepts, can help make you a better trader? Well,more knowledge? You might find that with multiple,
English logician and Franciscan friar William of Ockhamconflicting pieces of information, you actually can't
really can make you a better trader.trade at all - rather, you are a victim of "analysis
Ockham developed the concept commonly referredparalysis."
to as Occam's Razor. Simply put, this principle favorsThird, maybe your trading office looks like the control
the simple over the complex, when there is a choiceroom for the Space Shuttle. If you try to trade off
to be made, or a path to be followed.all of the information shown on all the screens, you
How can this apply to trading? A few different ways.might just find yourself overwhelmed. It is better to
First, if you are a system trader, perhaps yourstick to a few monitors of information, and know
approach has too many rules, too many parameters,that information very well. The best traders don't
or too much optimizing. While every parameter youneed a dozen monitors to trade well - usually 1 or 2
add might make your system better historically, themonitors is plenty.
more parameters you have, the less prone theMany new traders tend to think that that more
system is to work going forward. Simpler conceptscomplicated they make trading, the easier it will be to
and simple rules tend to be based on fundamental"solve" the markets. Instead, they should be listening
market principles - ones that aren't as likely toto William of Ockham, and making things simpler.
change.Simple, done correctly, can lead to more profits, and
Second, if you are a discretionary trader, you mightstand the test of time better than complicated
trade off of news reports from CNBC, Bloombergapproaches.
and multiple other sources. Multiple news sources