Forex Trading Tip: Watch your Profits Soar

By: Kelly Price

This is a very simple tip but if you use it you could see your profits increase dramatically and it takes into account a major error that a huge amount of forex traders make. Lets take a look at and why it will make your profits soar.

The trading tip is learn the 80 / 20 rule.

If you don't know what the 80 / 20 rule is it simply states that 80% of profits come from 20% of your efforts and it applies in many areas of business and finance and is very applicable to Forex trading.

Ask yourself this simple question:

How do you earn your reward in Forex trading?

The answer is simple - you get rewarded for being Right about market direction.

You don't get rewarded for how often you trade or the effort you put in, despite this fact most traders simply trade too much and do trades that have marginal chances of success. They should of course be trading high odds trades only and this means cutting back your trading frequency.

I know traders who trade just a few times a year and compound 100% or more and other who trade everyday and make nothing.

It's fashionable to trade a lot, as you can see by the amount of day traders.

Now day trading is impossible to win at longer term as you can't get the odds in your favour but the myht is spread by brokers who make money from frequent traders and vendors who sell Rubbish courses.

They will tell you it increases reward and decreases risk but in reality your 100% GUARANTEED to be wiped out as all short term moves are random and you can NEVER get the odds in your favor.

Other traders like to be in the market all the time in case they miss "a big move" but all they do is lose and others simply like the thrill and like all gamblers they get wiped out to.

If you want to increase your profits simply keep these two points in mind:

Cut your trading back and trade high odds set ups.

An example of this would be, trading breaks of support of resistance that are considered important by the markets. These breaks will then generate high odds trades.

THEN MAKE SURE:

You load the trade up with as much as you can risk - you can risk more on the high odds trades and milk them for all there worth.

Forget the common wisdom of risking 2% per trade if your trading a small account say $10,000 that's $200! Well if you don't risk you don't make Big gains- PERIOD Risk up to 20% on these trades and hit them hard.

If you think about the above Forex trading tip it's totally logical and makes sense:

Only trade the best set ups and when you see them load them up with as much as you can afford and have the courage of your coviction and trade the high odds trades for all their worth. If you Incorporate the 80/20 rule in your trading, you will increase your overall profit potential and decrease your risk.







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