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Why 80-20 thing does nt work in trading?

rvlvvel

Member
Why 80-20 thing does nt work in trading?

As an active or aspiring trader,
you’ve probably heard how treating your trading ‘like a business’ is an important part of making money like a true professional.

You might also have heard about the 80/20 rule. (And you might think it applies just like a ‘regular business’ — it doesn’t)

The 80/20 rule goes like this:

* 20% of your customers account for 80% of your sales

* 20% of your sales reps account for 80% of your sales

* 20% of your products account for 80% of your sales

… and so on. It’s not always exactly 80/20, of course.

Sometimes it’s 90/10 or 99/1 but whatever the number is, it’s an IMPORTANT number to know. And the law is important to keep in mind.

So how does it apply to trading?

Well … it doesn’t!

Unless you have really LOW standards for your return on investment.

Because if you do things that way,
only about 20% of your work will be what gives you your profits.

That is, you’ll spend a lot of time (80%) NOT being productive and wasting your effort on stuff that actually isn’t delivering cash in your account.

That’s not good!

What if you could flip that around instead …

… so that 80% (or better) of your work results in profits?

Not because you’re doing MORE work.

But because you’re doing a whole lot less!

That has a really interesting knock-on effect you’ll like.

Because doing it RIGHT not only cuts down on your time commitment, but it also ..

… bumps up your winning percentage too!

In fact, about 80% of your trades should be winners.

And that’s a good thing. A VERY good thing, because your return on your invested money (and time) has now gone WAY up!

So how do you do this?

Well, you need a system that cuts out all your wasted time — and eliminates the bulk of the losers from your trading too!

How do you do this super task?

use risk control-better stoploss
pick better entries
look up my other post-on dochian method

use a simple 5ema 20ema thing with a special hint t cut off loosers a lot


money management
it is trading 10 trades with 6 loosers,each loosing 2%,but winning 4 winners with each gaining 5%,net result being 8% profit.
problem is traders dont know how to do it or they have no control on risk-they allow risk to go up on its own.they simply look at sky=---------refuse to control risk-chnge this inactive mindset first.
 

freddieforex

Active member
Banned Users
Great posting my friend. I see a lot of trading systems that claim 80% wins and your theory makes one really think. Also thanks for the link too buddy!
 

WitmarkTrams

New member
Why 80 20 thing does nt work in trading

Why 80 20 thing does nt work in trading

I understand how the stock market works, but not how futures trading differs in the buying/selling process.

Can anyone suggest me about this.......??

Thanks a lot .
 

rvlvvel

Member
First thing
in trading you locate undervalued stuff that will go overvalued in future.

for example
take a 50 ma or a 50 period moving average.You can use a 200 ma also.

when price is in a strong uptrend and comes below 50ma for a shortwhile,we find that undervalued thing worth buying.
do you get the idea? NO, chances are a 80% no,not .
the risk is minimal.
---------------------------------------------------------------------------------
Second thing
you spot a train that has just stated moving and get into it.
price is the train.
once it leaves breakout level it goes moving catching speed.
turtles used breakout methods.

Turtles used futures trading using donchian basics.
buy when price crossed above hhv20
exit long when price drops below 10LLV.
There is a trailing stop of 2 ATR between hhv and llv.
traders exit with profit using 2 atr trailing stop.

SEE CHART ATTACHED.
chart uses pet d slow bar colors which helps trend spotting.
 

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