To compound money, and not your losses, you need to be aware of an insidious probability I call the 50/80 Rule. Here it is: Once a secular market leader puts in major top, there's a 50 percent chance that it will decline by 80 percent—and an 80 percent chance it will decline by 50 percent. Think about these probabilities for a moment. The 80 Percent rule is the most popular Market Profile / Value area trading strategy, 1st mentioned in The Profile Reports (Dalton Capital Management 1987-1991), which states that If the Market opens above or below the Value area and then trades within the value area for two consecutive brackets (Open or close of 2 consecutive Half hour period within the value area), then it has 80% chance of auctioning through the entire value area. 80% rule is also applicable if the market open within the value area in the 2 consecutive 30min bars and moves out of the value area. One can trade this 80% rule if the price reverts back again to value area for two consecutive 30min bars.
The 80% rule is a simple way to ride the market as it potentially fills the value area. However, there is an exception to be alert for. If it the market opens above the value area and then goes above or below it, the 80% rule can still come into play. This 80-20 RSI Trading Strategy uses the RSI indicator and involves price action analysis. Read the entire article to learn the step-by-step trading rules that will help you land great trade entries.
Get more information about IG US by visiting their website:https://www.ig.com/us/future-of-forexGet my trading strategies here:https://www.robbooker.comCheck The 80/20 Rule of Trading. 01/23/2012 11:58 am EST ... The 80/20 Rule . Have you ever heard of the 80/20 rule, also known as the Pareto Principle? Dr. Joseph Juran developed the Pareto Principle after studying the work of Wilfredo Pareto, a nineteenth century economist.
Eighty Percent Rule A futures trading technique which operates under the assumption that if a market opens outside its value area (where 70% of the prior session's volume traded) and then trades into value for two consecutive 30 minute periods, there is an 80% chance that the market will rotate all the way to the other side of value. The 80-20 rule, also known as the Pareto Principle, is an aphorism which asserts that 80% of outcomes (or outputs) result from 20% of all causes (or inputs) for any given event. In this video by Sean Jantz, founder and CEO of Binary Trade Group, you will learn about the Value Area and the 80% Rule. You will learn how to set it up and how to use the Value Area to make trading decisions. The video will provide training on the 80% Rule in more depth with live examples and examples from Sean's nightly trade plans.
Brad explains how the 80% rule works.
80-20 rule in trading. The 80-20 rule is very common in the trading industry. For you as a trader, you might find that your most profits come from trading a single currency pair or stock.For trading companies, they might find that most of their profits come from 20% of their traders. Thus, the 80/20 rule in trading is best applied by combining a simple trading strategy and a strong focus on money management and psychology, the synergy of this combination is a very potent force for making money in the market.