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Eliminating Losers by Taking Less Trades

The 80/20 Rule

A few weeks ago I sent you a challenge.

“Here’s a challenge for you…

See how many trades you took last week. Now halve that number. That’s how many trades you can take next week in the challenge…” The idea was to bring down the trade frequency, by half.


I firmly believe that less is more. If you can identify the conditions and setups that suit you best, you can start to improve dramatically. Stick with me here…

Let’s use some round numbers to illustrate the point:

Say you made £1,000 last week and you took 10 trades. The 80/20 rule nearly always applies. 20% of your trades accounted for 80% of those profits.

So 2 trades made you £800

8 trades made you £200

Makes sense right?

But that’s not quite true… In trading, we all have losers too. (Sorry Instagram crew.) So more likely you made £0 on the week and the split was like this:

1 x £800 winner
4 x £50 winners

Making £1000

But you gave back £1000, which £800 was probably from one trade. (80/20 rule on the losers.)

Winning is not your challenge. Losing those gains is.

That’s why reducing the number of trades is so effective. You strategically half the number of trades, but focus that reduction on the worst type of trades and conditions. In a perfect world, you’d eliminate all your losers, but that ain’t gonna happen. In reality, you only need to eliminate that £800 loser on the week to go from red to green…

Halving the number of trades is like casting a net into the losing trades pond. Cast it wide and scoop up as many losers as you can, but if you just get the really bad ones that will flip your P&L nicely.

Trade to win, but focus on the losers…

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