This is a simple trading tip which can help moist forex traders and allow them to make more money in less time and with better odds. In fact this is not just a tip for forex trading it's a tip for life, so learn it get more out life and supercharge your forex trading profits all at the same time - here it is...
The Pareto Principle, also known as the 80-20 Rule, states that a small number of causes (20%) is responsible for a large percentage (80%) of the effect.
The principle was put forward by Joseph M. Juran and was named after the Italian economist Vilfredo Pareto, who observed that 80% of income in Italy was received by 20% of the Italian population.
The assumption is that most of the results in any situation are determined by a small number of causes.
The value of the Pareto Principle in life and forex trading is - it tells you to focus on the 20 percent that matters. Of the things you do during your day, only 20 percent really matter in terms of enriching your life and financial future.
The lesson in forex trading is cut down your trading frequency!
Most forex traders simply trade to much. They trade positions that have marginal profit potential (a good example is forex day traders or scalpers) and they forget that there is one criteria you are judged on in forex trading and that's:
The accuracy and profit you make, with your market timing or trading signal - that's it, the effort you make or the amount you trade is not relevant, only profits are.
It's a fact that trader's who trade infrequently and are patient, make more money than traders who simply trade the noise and the action. I know traders who trade less than once per month in any currency yet make triple digit annual gains.
If you trade less, you can risk more because the trade has the odds on its side and is more likely to be successful.
Today traders think that they simply have to trade a lot to make money - but these traders aren't focusing on making money, their focused on the thrill of trading. I would rather get my thrill elsewhere, for me forex trading has simply one aim - making money.
The 80 - 20 rule is not just a rule applicable to forex trading, it's a rule that can enrich your life in all areas and is one that if you think about, it occurs time and time again.
If you learn it and apply it in forex you will get - better odds, bigger profits per trade, your forex trading will take less time and be more successful.
Sure, it's a simple trading tip but it's very powerful one and if most traders absorbed it, they would make a lot more money in less time.
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