The 80 – 20 rule is a simple rule which is used I many areas of life and if applied to Forex trading, can make your Forex trading strategy more profitable. Let’s take a look at it…
The 80 – 20 rule in business means, that 80% of your profits will probably come from just 20% of your clients. In Forex trading it means, that 80% of your profits will come from just 20% of your trades; this leads to an obvious conclusion:
You don’t need to trade a lot to win; you need to trade with the best odds of success.
Let me ask you a question…
How many times per annum, do you think you need to trade to make triple digit profits?
The answer is not many, if you focus on the high odds trades! I know traders who trade less than once a month, and turn in huge triple digit gains.
They don’t focus on trading often, they simply trade the best set ups and if you do, t your trading profits will increase, your risk will decrease and you can spend less time on your trading.
You don’t get your reward for trading a lot in Forex trading; you get rewarded for being right with your trading signal and the size of your profit per trade.
If you focus on the big trends which last for weeks, months or even years, you can get in and hold them and make huge gains.
Think about it:
Most traders trade to much. They day trade or they try scalping small profits and don’t get very far – but if they focused on getting in on the big long term trends and holding them, they would make bigger profits with less effort.
So to win apply the 80 – 20 rule.
Cut back your trading frequency and increase your profit potential. It’s a simple, common sense rule that works and will lead you to currency trading success.