The 20-80 rule again?

I was having a chat with an experienced trader the other day... one topic we touched upon is the percentage of people who really made money in forex.

It is generally believed that only 20% of people really made money in forex. The other 80% are losers! Another view is only 5% make money, 15% break even (more or less) and 80% lost money!

Whatever it is, sounds familiar isn't it? Don't we often hear of 80% of bird nest farmers don't make it too?

Is it the Pareto Principle all over again?
i.e. The law of the vital few and the principle of factor sparsity.

This idea originated from an Italian economist Vilfredo Pareto, who observed that 80% of income in Italy went to 20% of the population. It is a common rule of thumb we find in many real life situations.


















Unfortunately, this seemingly is a 'law of nature' and fact of life!

So it is the same struggle to be on the side of the 20% winners! Hard isn't it?

Don't despair, there is a brighter side to the coin of the Pareto Principle we learn to apply in industry:

















There are several interpretations to this:

Concentrate on the 20% efforts that yield 80% of the results!

or identify and focus on the 20% of factors that attribute to 80% of improvement in results.

You may have known this before. By keeping it fresh in mind always, one will find it helpful tackling issues in many real life events; be it improving your bird farm yields or formulating a winning strategy in trading.

You may identify the 20% of the trading times that yield 80% of your gains!