There's a sequence that plays out in every trading Discord, Telegram, every watchlist review.
Someone asks a successful trader how many pairs they watch. The answer comes back small. Two. Three. Maybe four. The person asking doesn't believe it. They have fourteen on their list. Dropping to three feels irresponsible. Like missing opportunities. Like being amateur.
So they keep fourteen. Add a fifteenth.
This is how safety becomes sabotage. The behavior that feels professional is the behavior destroying performance. The behavior that feels reckless is the one that works.
Two investors with nothing in common arrived at the same conclusion about this independently.
William O'Neil studied the greatest stock winners in history and built a fortune trading momentum. Warren Buffett bought undervalued businesses and held them for decades. Their methods share almost nothing.
Except this.
O'Neil, in Market Wizards: "Diversification is a hedge for ignorance. I think you are much better off owning a few stocks and knowing a great deal about them."
Buffett, decades later: "Diversification is protection against ignorance. It makes little sense if you know what you are doing."
Different eras. Different philosophies. Same word: ignorance.
Not risk management. Not prudent allocation. Ignorance.
The mechanism behind their agreement matters more than the agreement itself.
When O'Neil was pressed on what concentration actually looks like, he gave exact numbers:
$50,000 account — five or six positions.
$100,000 account — six or seven positions.
Not thirty. Not a rotating watchlist based on what's moving that morning. Six or seven.
His reasoning wasn't philosophical. It was mechanical.
The brain holds roughly seven items in working memory at once. This isn't a discipline problem or a focus problem — it's hardware. Try to track fourteen instruments and your mind starts dropping information, filling gaps with assumptions, making decisions based on incomplete processing.
Fewer positions means you actually see what's happening.
More positions means you think you're seeing more but you're processing less.
Here's where it gets uncomfortable {{first_name}}.
There are two games. Long-term investing and active trading.
One is about patience — buy an index fund, hold for fifteen years, sit through bear markets without touching it. The other is about precision — own few things, understand them deeply, act fast when you're wrong.
Most traders blend the two into something that serves neither.
They watch fifteen pairs like a fund manager but trade them like someone who needs to be in and out the same day. They track eight timeframes looking for "confirmation" but execute like someone who should be watching one chart. They build a diversified watchlist and then wonder why their results look like an index with worse drawdowns.
You already know which category you fall into.
The question nobody wants to answer honestly: is the watchlist size strategy or self-protection?
Spreading across fourteen instruments feels responsible.
It looks serious. It's what professionals do.
Except it isn't.
Professional traders at institutions aren't generalists scanning everything. They're specialists. One desk trades EUR/USD. Another trades crude. They know the liquidity patterns, the session behaviors, the institutional footprints of their specific instruments — depth that takes years to build.
Retail traders see the surface and copy the wrong part. Breadth without depth. Attention spread across instruments they couldn't explain the mechanics of if someone asked.
That's not diversification. That's dilution dressed up as professionalism.
And somewhere, quietly, they know it.
The traders who stopped diluting didn't just shrink their watchlist.
They systematized what to look for on the pairs they kept. One framework instead of fourteen discretionary reads.
Some figure that out after blowing a few challenges.
Some figure it out after blowing more than a few.
Some never do.
Talk soon,
Atif
