Forex Trading Success - Learn the 80-20% Rule and Increase Profit Potential Instantly!
The 80 - 20 rule is a simple rule that anyone trading currencies can learn and if you do understand it, it can lead you to bigger profits and Forex trading success. Let's take a look at it in more detail...
The 80/20 rule was developed by Italian economist Vilfredo Pareto to describe the unequal wealth in his country. He saw that 20 percent of the people owned 80 percent of all the wealth. The 80 / 20 rule has been applied in other areas and is very applicable to profitability in business.
It has been seen that in many companies (both large and small) that 80% of a company's profits will be generated by only around 20% of the clients.
The real lesson of the Pareto principle is to make you focus your energy and work on the 20 percent that really matters. If you think about it makes total sense and in Forex terms it means, you focus on the best trades with the highest profit potential.
The 80 / 20 Rule applied to Forex
One of the reasons most novice traders lose is they simply trade too much. They try scalping or day trading, or think if there not in the market they will miss a good move but all they end up doing, is taking low odds trades and get wiped out.
I know traders who trade maybe once or twice an month but make triple digit annualized gains because they are focusing on the best opportunities and NOT trading for the sake of trading and you should do this too. Keep this key point in mind:
There is no link between how often you trade and your profit potential!
In fact if you trade less, your chances of making bigger profits are increased, as you're hitting less trades but with higher odds of success.
Look at any Forex chart and you will see long term trends and these trends can last for months or years and if you get in at the right levels and simply hold these trends, you can make a lot of money. Long term trend followers make the most money in Forex and that's a fact, the trader who trades the noise always loses.
Very few Forex traders are able to apply the rule and never adapt their forex strategy to take advantage of it and end up losing.
If you understand the rule, you can not only make more profits with less risk, you can also spend less time on your trading - so you get more profits, in less time and that's what all Forex traders should be interested in!
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