No Time to Board Boeing

Sometimes less is more. Now there's an idea that's applicable to just about every aspect of life, but it certainly applies to trading. Think about it: In the trading world, many of us could use less analysis, not more.

While this may sound like blasphemy to the hard-core number crunchers and spreadsheet warriors, hear me out. The most robust fundamental analysis first distinguishes between data that are nothing more than noise and data points that really matter. Skilled analysts focus their energy on important data, not the minutiae.

This "less is more" approach also applies to chart analysis. I have heard Jim Cramer say on many occasions that "charts work great ... until they don't." This observation illustrates the less-is-more approach to trading.

Chart analysis should be simple. We look at charts for two reasons -- to find the trend and to assess its strength. Newton's first law of motion really defines a price trend -- "Objects in motion tend to stay in motion ... " Once you find the trend, don't argue with Newton. Just accept it and operate under the premise that the trend will remain in place -- period.

Approach the market with a strong bias that the prevailing trend is valid and you'll be right every time. Yes, you'll always be right ... except for that one time when the trend actually does end, when the chart doesn't work.

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At the time of publication, Fitzpatrick was long NVE Corp., though positions may change at any time.

Fitzpatrick is a freelance writer and trading consultant who trades for his own account in Encinitas, Calif. He is a former co-manager of a hedge fund and teaches seminars on technical analysis, options trading and asset-protection strategies for traders and business owners. Fitzpatrick graduated from the McGeorge School of Law and was a fellow at the Pacific Legal Foundation, a nonprofit public interest firm specializing in constitutional law. He also practiced law in the private sector before pursuing trading as a full-time career. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. While Fitzpatrick cannot provide investment advice or recommendations, he appreciates your feedback; click here to send him an email.