Forex Trading - Instantly Increase Your Profits With The 80 - 20 Rule

[Conrad Ladd]

The 80 - 20 rule was not devised for Forex trading - however if you
apply it in your trading, you'll instantly increase your profit
potential. The rule is simple to understand and apply - and all Forex
traders should use it.
So, what is the 80 - 20 rule, and why is it so powerful in terms of
making Forex profits?
The Logic of the 80 - 20 Rule
In the nineteenth century, Vilfredo Pareto, an Italian philosopher,
observed that a small section of the population held most of the money
and power. He postulated that in most countries, 80% of the money and
power was controlled by around 20% of the people. Therefore, 20% of
the participants accounted for 80% of the results.
The 80 - 20 rule applies to many other areas of life - including Forex
trading, and in simple terms, the key point to consider is this:
80% of your results will be generated by 20% of your efforts.
This also means that:
20% of your results will be generated by 80% of your efforts.
In Forex trading, it's a fact that most traders make this critical
error - they trade too much - and try to force results by working too
hard.
Here's what you need to do, to apply the 80 - 20 rule in Forex
trading, and increase your results:
1. Cut out short term trading - like Forex day trading. In day
trading, you trade frequently - but it simply doesn't work. This is
because all short-term volatility is random - and you can never get
the odds in your favor.
2. Only trade significant technical patterns - such as critical breaks
of support and resistance, with your Forex trading system.
3. Risk more per trade on the "good trades" - up to 20% is OK.
Remember, risk goes with reward - and you need to take meaningful
calculated risks, when the odds are in your favor.
4. Don't diversify! Forex traders think this spreads risk, but all it
does, is simply dilute profit.
In terms of your Forex trading strategy: Focusing on the above will
make you more money - but you'll also reduce the effort you put in.
Shift your emphasis to long term trading - and only trade the best
signals. By doing this, your workload - and the amount of time you
need to spend on your Forex analysis will be reduced.
If you apply the 80 - 20 rule to your Forex trading in the above way,
you'll cut the effort you put in. You'll also increase the profits you
make - and that's what all Forex traders want!
Cutting the Effort You Put In and Getting Bigger Rewards
Many people think that the more effort you put in, the better the
results you obtain. This is true in many areas of life - but not Forex
trading! Here you are paid for being right with your Forex trading
signals - that's all.
Also, don't fall for the myth that the more you trade, the better your
chance is of having Forex trading success. This is simply not true -
because the big trades, with the best ratio of risk to reward don't
come around that often.
Incorporate the 80 - 20 rule in your Forex trading strategy, and watch
your profits soar.

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