Forex Tip - a Simple One to Increase Profits Dramatically

This forex tip is simple to understand and easy to apply - but if you use it you could see your profits increase. It helps you avoid a major problem that the majority of forex traders make. Let’s take a look at it.

This trading tip is simply to learn and apply the 80 / 20 rule.

The rule simply states that 80% of profits, come from 20% of your efforts.

The 80 / 20 rule applies in many areas of life, business and finance and is highly applicable to Forex trading.

Think about this – How do you make money in forex trading?

The answer is of course by being Right about market direction, with your trading signals.It doesn’t matter how many times you trade or the effort you put in, it all comes down to being right about market direction.

You don’t get rewarded for how often you trade or the effort you put in - this is very important!

The fact is most forex traders trade too much and do trades that have marginal odds and therefore marginal chance of success.

Most traders think the more they trade and the more effort they make the more successful they will be – but this is wrong, nearly all new traders and many experienced ones trade when they shouldn’t.

I know traders who trade less than once a month yet compound 100% - 200% or more and other traders who trade everyday and lose.

It’s a common myth that you need to trade a lot to win - but the fact is if you do then you won’t be trading the best odds and if you don’t trade the best odds trades then your chances of success are reduced.

If you want to increase your odds of success and your profits keep these two points in mind:

Cut your trading frequency and only focus only on high odds trades.

An example of this would be, trading breaks of support of resistance that are considered valid by the markets. These breaks will then generate high odds trades as when they do break stops are hit and new trend followers kick in, because the level is so significant.

Risk More

Just like the successful poker or blackjack player, when you see the odds are in your favor increase your bet size accordingly.

You load the trade up with as much as you can afford to make sure you take advantage of the increased odds of success. You should risk more on the high odds trades and maximize them for all there worth.

Many forex writers say you should risk 2% per trade Maximum!

Well if you do this you won’t make much.

For example, say you trade an account of $5,000 that’s $100 - if you don’t risk you don’t make it’s as simple as that.

If you want to win, you need to take calculated risks at the RIGHT time.

There is nothing wrong with taking a risk if the odds are in your favor – its better to risk 20% on a high odds trade than do 10 x trades risking 2% with marginal odds.

Risk up to 20% on these high odds trades and hit them hard.

If you think about the above Forex trading tip above its logical and sensible and gives you the opportunity to make some great gains. The majority of writers and traders won’t agree with it – but the fact is the majority don’t make a lot of money or lose in forex trading.

If you want to win, you need to trade the odds and just like the successful card player, you need to alter your bet size accordingly when you see the opportunity and hit the high odds opportunity HARD.

Incorporate the 80/20 rule in your forex trading, you will increase your overall profit potential and just as importantly your overall risk will decrease too.