Tag Archives: focus

Forex Money Management – Incorporating the 80-20 Rule For Triple Digit Gains

Forex money management is the hardest part of forex trading and most traders simply make errors that doom them to failure. Here we will look at how understanding the 80 / 20 rule and using it in your trading system can make you bigger profits with less risk…

The 80 / 20 rule is simple and states:

That a small number of causes (20%) is responsible for a large percentage (80%) of the effect. The principle was named after the Italian economist Vilfredo Pareto, who noted that 80% of income in Italy was received by just 20% of the population. The value of the Pareto Principle in life and forex trading is – it tells you to focus on the 20 percent of your trading that really matters.

Most traders simply trade too much and the 20% that matters are really just the high odds trades – get rid of the marginal and low odds trades and trade high odds set ups only.

The fact is many traders think the more they trade the better and the more chance they have of enjoying currency trading success. Most try trading the market noise and try forex day trading or scalping – but they are doomed to failure and get wiped out. Trading profits are not correlated to how often you trade, as you are only judged on being right with your trading signal.

If you trade 100 times or twice all that matters is the amount of money you put in the bank from your market timing.

I know traders who trade just a few times a year and make somewhere between 100 – 200% just simply because they wait for high odds trades, hit them and hold them.

Trading less, is more time efficient and more profitable.

Look at any new traders account and they will be over trading and if you make the mistake of taking marginal trades you will lose.

Money management is all about protecting the account equity you a have and if you focus on high odds set ups only, you are going to increase your profit potential overall.

The 80 / 20 rule works in forex trading just as it does in all areas of life and if you use it in forex trading you will focusing on making money and that at the end of the day, is what forex trading is all about.

So think about it, apply it, watch your profits soar and your account equity risk decline and get on the road to currency trading success.

Forex Robots – 4 Major Reasons Traders Lose With Them

Can you make money with a Forex Robot? The answer is yes – but most traders lose with even a good robot! Here we will give you the 4 reasons traders lose and how to find the best automated Forex trading system for you…

First of all most of the Forex Robots sold are junk and lose money because they base their track record on logic that is not correct.

1. Do Not Expect Simulated Back Tests to Repeat

Most Forex robots present a simulated back test on historical back data as evidence that you are likely to make the same going forward!

This is of course not true, as anyone can make money knowing the closing prices but in the real world of trading this key advantage is not available to you.

All vendors do is – bend the rules of their system until it fits the data and gives a profit. Of course as no two pieces of historical data ever repeat, the system breaks in real time trading and the system losses.

Bending rules to fit the data is a bit like shooting at a barn wall and then drawing a chalk circle, around every shot, to make it a bulls-eye, after the event!

If you expect a simulation to give you profits in real life, you will end up disappointed and with a wipe out of equity.

2. Not Enough Cash to Start with

Most Forex robots claim you can start trading with $100 or so well even with a good system this simply is not enough money to give you any staying power and the account gets wiped out.

Now let’s say, you have a good Forex trading system with a real track record of profits, you still have to keep two key points in mind when trading it or you will lose.

3. Learn the Logic and get Confidence

I often see the phrase you can trade and not know what you are doing – but you can’t! Even if you are following a proven system, you need to know the logic on which it is based, or you will not have the confidence to trade through a losing period and stay with your system.

All systems have drawdown and you need to have, rock solid confidence to keep going until you hit a home run and this is based on knowing what you are doing.

4. Ignore the Short Term Focus Long Term

Most Forex traders want to make a short term killing but you must focus long term and ignore the short term. Most automated Forex trading systems will face drawdown periods of a few weeks to a few months and drawdown from peak equity is normally at least 25%, you need to ignore this and focus on a 2 or 3 year holding period and be patient.

A FREE Robot for Big Gains

Forex robots can and do, make money for patient disciplined traders who focus on the long term. The naive, greedy traders, (who are the majority) look for a quick killing in the market and trust simulations and they lose.

If you want a good Forex robot that’s free and works look up the 4 Week Rule.

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