There's an age-old rule of thumb that is well-known in circles of wealth creation; the 80/20 rule. In effect, the 80/20 rule just proves something you probably already know, but recognizing the 80/20 rule serves to liberate individuals interested in creating wealth, helping them to move on to bigger and better things.
The 80/20 Rule In Wealth Creation
What is the 80/20 rule? It's a way of understanding the distribution of wealth; a way to put wealth-holding in perspective.
The 80/20 rule in wealth creation is this:
-80% of the people in the world make 20% of the money; in other words, in terms of wealth distribution, a scant 20% of the wealth in the world is divided amongst 80% of the world's population - and in gross disproportions at that.
-20% of the people in the world make 80% of the money; in other words, in terms of the distribution of wealth, a whopping 80% of the money in the world is controlled by a miniscule 20% of the population.
Many exerts in the wealth creation field will refer to this rule not as the 80/20 rule, but as the 90/10 rule. That's because they believe the distribution of the world's wealth to be even more disproportionate, with 90% of the money in the world being controlled by a mere 10% of the world's population.
This hardly seems fair, and in fact there is little fair about it. But as long as there are free markets, there is money that can be made by that 80% of the population, and those percentages certainly can change.
Tipping The 80/20 Scales
Realistically, then, what can the average person do to make money and create his or her own wealth? Is this even possible? Or are these percentages set in stone, incapable of changing?
Of course there is opportunity to change, at least for those in the "free" world. Average men and women the world over can educate themselves and learn the ways to make money, to build wealth and financial freedom of their own. But they have to take the initiative.
There are excellent wealth creation programs online (and off) for building personal wealth. Sure, there are scams, too, but there are a number of proven, successful programs for creating wealth that have made regular men and women in many nations rich - free from the stresses of the working life, stripped of the confines of the "rat race". It does take a little effort to study these programs and decide upon a winning equation for financial success that will work for the individual, but assuming that the right financial wealth-creating program has been identified, there is more for the successful wealth builder to do.
The successful wealth builder puts forth a passionate effort.
Not a careless effort; not a haphazard effort; not a half-hearted effort; a true effort. Successful wealth builders the world over have one thing in common (and it doesn't matter what kind of system for making money he or she is using). The ones who get rich set their minds on a goal, and steel themselves to the work that must be done. They do what it takes, and it pays dividends.
The one thing everyone likes to say relative to wealth creation is that "if it sounds too good to be true, it probably is". While this may apply to get-rich schemes, it does not apply across the board to wealth creation. Wealth can be made as long as the person is willing, and is passionate about their goals. Great money making opportunities are out there, and they do not have to cost a lifetime's worth of savings or consume every waking minute of the day (although admittedly, success is proportionate to effort expended, so long as that effort is expended efficiently).
To sum it up, the 80/20 rule is not written in stone. It can be changed. It can be 50/50. But as long as people believe that they cannot create wealth of their own, and as long as people are resigned to putting out the effort, the 80/20 rule, or something very close akin to it, will endure.
Phosphor Bronze 80 20
Lets look at how to apply the 80 – 20 rule in currency trading and make triple digit annual gains.
Definition
The 80/20 rule was developed by Italian economist Vilfredo Pareto to describe the unequal wealth in his country.
He noted that 20 percent of the people owned 80 percent of the wealth.
The 80 / 20 rule has been applied in other areas and is very applicable to profitability.
Lets look at its significance in general business terms and then apply it to financial currency trading.
Often 80% of a company’s sales will come from only 20% of their key clients.
The point of the Pareto principle is to suggest that you focus your energy on the 20 percent that really matters and if you think about it makes total sense – you focus on where the profit potential is best
The 80 / 20 Rule applied to Currency trading
One of the reasons most novice traders lose is they trade to much – they think that if their not trading their missing an opportunity, this is typical of forex day traders, who think they can win trading frequently, they can't and never do.
Other traders trade on emotion and news and again get hammered.
There is absolutely no correlation between how often you trade and your forex profits, in fact the LESS you trade can lead you to currency trading success.
How To easily make triple digit gains
Look at any currency chart and how often do you see a really big move - that’s one that is a strong sustained trend, with very few or small retracements?
About half a dozen times a year across the majors.
If you took the 80 / 20 rule and applied it to currency trading you would come to the conclusion that these are the trades that make the most money and are the ONLY ones you need to hit to make spectacular gains.
So you trade less but you make a lot more.
Sounds simple?
It is - yet very few currency traders are able to apply the rule and never adapt their forex strategy to take advantage of it.
If you do, you can make more profits with less risk and spend less time executing your trading signals.
Focus on hitting the really big trends and a clue to finding them is, they normally take place from new market highs.
Look for valid resistance that is strong and been tested numerous times, is considered significant and then trade the breakouts that occur.
Risk as much as you can only on these trades.
Do it and adapt your forex trading system to do this, you will achieve currency trading success and triple digit regular annual forex gains will be a realistic objective.
Both Sean Rasmussen & Kelly Price are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Sean Rasmussen has sinced written about articles on various topics from Personal Finance, Business and Finance and Penny Stocks. Sean Rasmussen is a part time stock market investor and internet marketer. He is known online to Create Wealth and teach. Sean Rasmussen's top article generates over 40500 views. Bookmark Sean Rasmussen to your Favourites.
Kelly Price has sinced written about articles on various topics from RSS, Learn Trading and Forex Trading Forex. GRAB 3 X FREE TRADER PDF'S AND MUCH MORE! On all aspects of becoming a profitable trader including features, downloads and some critical FREE Trader PDF's and more FREE. Kelly Price's top article generates over 165000 views. Bookmark Kelly Price to your Favourites.
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