Forex Trading Tip - A simple Tip to Dramatically Increase Your Profits

This trading tip is simple logical and will if you apply it increase your profit potential dramatically. It dates back to the nineteenth century and applies in many areas of life not just forex trading and is known as the 80 - 20 rule. Let's take a look at it in more detail.

The 80 - 20 Rule

Vilfredo Pareto, an Italian philosopher, noted that just 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 just 20% of the people. Therefore, 20% of the participants accounted for 80% of the results of the entire nation. The 80 - 20 rule applies to many areas of business where 20% of customers account for 80% of the profits and the 80 - 20 rule also applies to Forex trading and in simple terms, the key factor to consider is this:

20% of your efforts will account for 80% of your profits - so what do you need to do?

Cut your trading frequency - it's a known fact that most traders trade too much, take low odds trades and lose.

How many traders for example engage in day trading? They think that they can get lots of small profits and build long term gains - it doesn't work. There trading so often in such sort time frames that they cant get the odds on their side and lose guaranteed. But its not just day traders that over trade - most traders do.

I know traders who trade less than a dozen times a year, yet make triple digit profits and the reason is -they are focusing on high odds trades only and you should do the same.

Lots of forex traders don't actually want to make money there just there for the thrill and experience - if you want an experience and don't mind losing that's fine - personally I would rather go to the casino!

If you want to make money its time to cut your trading back and only hit the high odds trades doing this also has another advantage:

You can hit them with more money and increase your profit potential.

If you have a high odds trade by its very nature you should risk more as you are not trading so often. You have a higher chance of success and that means risking more money.

Forex trading success is all about getting the odds in your favor and taking calculated risks when you see them - this isn't being rash, this is a sensible way to make forex profits.

If you think about the above and apply the 80 - 20 rule, you should be able to increase your forex profit potential and in some cases it will be dramatic.