How to be more Effective with Less Effort!

How to be more Effective with Less Effort!

Its not only what you do but how you do it thats going to affect your trading success.

Welcome to the world of 80/20 rule, where it is possible to gain more from less.

Before we get into how the 80/20 rule applies to trading, a little background.

“For a long time, the Pareto Law(80/20 rule) has lumbered the economic scene like an inconsistent block n the scenery, an empirical law which nobody can explain” – Josef Steindl

The 80/20 rule asserts that a minority of causes, inputs or effort usually leads to the majority of results. Contrary to what most people believe, the cause and effect are not balanced equally. They rarely are in the ratio of 50/50. Often, if not most of the time, a small portion of effort leads to the majority of results. Every facet of life mirrors the 80/20 rule. Take for example Forex Trading. Figures point that the number of successful traders is in the ratio of 90/10. While many will argue to the figures, what is more important is to observe that the Pareto rule is in effect here.

Successful traders know that you should know when to step on the gas and when to ease out. All trades are not equal. Sometimes you need to go for those long runs and hang in there to make every pip count and sometimes you need to trade small. The only way to make money in the markets is to trade those long trends where most of the money is made. Its often said “Trend is a traders best friend”.mythical traders like Richard Dennis, Ed Seykota, and others are examples who have integrated the 80/20 rule into their trading.

The best way to make most use of this rule in your trading is to study your trading patterns. You will notice that the winning percentage of trades to losing trades are not equal and in order to succeed,you need sufficient high net gains to offset your losses.Lot of traders lose money in the markets and cannot understand why after following all the rules, they nevertheless keep losing money. They dont bother to look at their trades and understand the reasons are for their losses.Maybe it is a single pattern or that breakout trade which is giving you the most gains or the reversal trades which is causing the most losses.

You need to look under the cover to understand your trading habits and graduate towards better trading.

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