Like everything else in trading, it is all about balance. Extremes do not fare well in this sport. Why you may ask.
Yes, we heard about the Dellionaire who only traded that one stock or other specialized scalpers and pure S&P traders.
Let's rethink principle-based.
Of course, it is necessary to know your trading instruments very well to consistently extract profits from the market, but is it wise to focus on just one or two?
Let's say you missed a turning point on your instrument, leaving you frustrated. And let's say that turning point was a long play, and now you are looking for shorts (since that's all that's left). If you, by bad luck, find yourself in an upcreep, you are shorting into the worst possible short scenario since nothing is stronger than an up creep.
In short, without choices of various markets where you are scanning for low-risk entries, you are pushed towards limited choice trading. You can find yourself quickly in a situation to be trapped trading low-probability, high-risk plays in the one or two instruments you exclusively look at.
And this is the mildest form of forced trading that happens from your shortcoming of having missed a turning point which can be remedied with a rule in place. But what if your instrument goes through an extreme change like DELL stock did multiple times, or your index finds itself in a shrinking range and volatility cycle for a more extended period eliminating opportunity?
The other side of that coin is being overwhelmed by search machines or mixing trading styles and, worst, getting into execution conflicts with too extensive a portfolio and too much psychological stimulus if the spectrum of trading instruments and time frames is overwhelming your capability of managing your trading universe well.
Balance; this is where the trader, as usual, finds his or her content place to balance the challenges of evaluation and execution with just the right choice menu and the opportunity to get still intimate with your trade candidates to know them inside out.
There is no precise number that can be named since the experience level of the individual trader determines how many markets he or she can trade but staying away from the extremes is undoubtedly an excellent way to find one's personal balance field.